Telcos focus on enterprise services for stable revenue

Written by Nikita Upadhyay | Nikita Upadhyay | Mumbai | Updated: Jul 21 2011, 08:49am hrs
Telcos today have turned to enterprise services in a big way. While Bharti Airtel and Reliance Communications were traditionally offering these services, Vodafone India and Tata Teleservices (TTSL) have also ventured into this unit with high decibel promotions.

The enterprise business provides end-to-end telecom solutions using wireless, wireline, voice and data to corporate customers.

Currently pegged at around R23,000 crore, the Indian enterprise-connectivity market is growing at an annual rate of 12-13% and is estimated to be worth around $10 billion (approximately R47,000 crore) in the next five years.

In the present scenario, where customer acquisition is steep and the voice business has almost saturated, enterprise business will continue to grow. On an average, corporate clients spend around R3-4 crore per annum on their telecommunication needs. We fit in best, as telecom companies can leverage on their existing network to provide these services. With 3G coming in, it can also be used for providing last mile connectivity, said Sukanto Aich, president of enterprise business at TTSL.

Bharti Airtel, while reporting its March 2011 quarter results, had said that this is a business which has an Ebitda margin of about 24-25%.

During the same period, RCom had recorded a revenue of R691 crore, an increase of 11.7% sequentially. The enterprise business is a strategic initiative to drive growth. India is a key market for us and Vodafone is geared to be a one-stop-shop for communications solutions, said Naveen Chopra, director, enterprise and carrier business, Vodafone India.

Experts say that telcos have renewed their focus on the enterprise business for the last 6-8 months due to dwindling revenues, low profitability, seasonality in the business and high customer churn.

It is a stable revenue stream and provides a better margin than the traditional voice business. Here, they also have the choice to bundle services and offer discounts to engage corporate clients. Most of these companies are innovating on value-added services in this space like managing hardware remotely, said Shree Parthasarathy, senior director, enterprise risk services, Deloitte India.

These services differ from one provider to the other but generally include internet, MPLS -VPN, domestic and international private leased circuits, audio and video conferencing, data centre services, managed network services, EPBX solutions.

Telcos currently offer these services to industry verticals like BFSI, IT, ITeS, manufacturing and distribution, media, education, telecom, government and retail among others.

This was the area earlier dominated by players like HP, IBM, Datakraft, Wipro, amongst others. Telcos have always had this division. But it is only now they have set up dedicated teams to market these services Most of them have started with the SMBs and have roped in big corporates. This will not only give them a continuous revenue stream but also drive optimum utilisation of their existing assets, said Benoy CS , director, ICT practice, Frost & Sullivan, South Asia and Middle East.