Tulip Telecom, the country?s largest MPLS (multi protocol label switching) data connectivity provider, plans to extend its last mile connectivity to 100 cities in the next two years. HS Bedi, CMD, Tulip Telecom, in an interview with FE?s Rachana Khanzode, says the firm will invest Rs 300-400 crore for the expansion. The Rs 443-crore firm is currently focusing on its wireless VPN business and going ahead, wants to target the Rs 956-crore international business. Excerpts:
What strategy has Tulip laid out to concentrate on data business?
Our current data business caters to only 15% of the addressable market. This is because we miss out on high bandwidth international distance Internet and the VPN market, which contributes to about 80% of the market. So going ahead, we will extend our last mile connectivity to about 100 cities within the next two years. This will be in category C cities, since we have largely covered the metros and category A and B cites. We will also be investing about Rs 300-400 crore for this expansion, to be funded internally. With this, our addressable market will grow to 100%. Currently, the basic infrastructure is complete and extended fiber will only be used in commercial business where high bandwidth is required. These towns have market potential, as most large financial organisations operate in these areas.
Does this also include your rural expansion?
Our rural expansion will be beyond this number. We have already invested about Rs 150 crore for the last mile connectivity. If we look at rural areas, we expect it to reach about Rs 600 crore. We also see a huge opportunity in the rural market with a number of government projects coming in, especially the unique identity (UID) and national rural employment guarantee (NREG) programs, amongst others. For these programs to be successful the presence of IT channels is required for checks and balances and this creates the demand for a strong network.
So when do we see this happening?
Firms like us are open to investing and rural expansion but we cannot go to a market where we don?t know what the business is going to be like. For this, the government needs to make the industry more competitive by not giving subsidies to the public sector units. For the new projects there is no clarity on how the contracts will be given. The government should also raise the demand for good services and thus create competition in the industry.
What about the WiMax license?
We are not looking at WiMax, largely because the spectrum is not enough to push the data. Around 90% of the country is based in rural areas and these can be connected without WiMax. At the same time, tariffs will be higher than the current wireless charges. So it doesn?t present a business case for Tulip. For us, a major chunk of the business comes from the enterprise segment which is constant, while WiMax caters to mobile individuals. Also, the bidding price at Rs 2,000 crore is too high to invest for such small spectrum.
