We all know about how the telecom space has been disrupted by aggressive competition and new technologies that effectively commoditised the voice business over the past decade or so. And just like all players have shifted from voice to data, so has Tata Communications. But unlike its peers, Tata is not a consumer telecom company but one that is focused on the business enterprise segment. Formerly known as VSNL, the Tata group entity continues to have the government as a stakeholder with a 26.12% stake. While most other players have hogged the limelight, Tata Communications has been the silent achiever. Though the group’s other listed entity Tata Teleservices hasn’t really made much headway, Tata Communications has reinvented itself from being just a state-run enterprise that was the sole provider of international wholesale voice services.
The company has transformed itself from a pure-play, long-distance voice company into an integrated communication provider with a larger focus on the high-growth data business. Led by a strong focus on network expansion and the ability to execute large network deals, the firm has been shifted from the Visionaries quadrant (lowest level) to the Leaders quadrant (highest level) since 2013, according to Gartner Magic Quadrant for Asia Pacific network service providers. This is an important milestone, as it allows the company to get higher request for proposal (RFPs) for large-scale network deals of global corporates.
According to research firm IDC, global data generation is expected to grow tenfold by 2020, with emerging markets likely to surpass mature markets by 2017. Tata Comm is best placed to take advantage of this after completing its huge network investment — the world’s first wholly-owned cable network ring. To take advantage of the strong data consumption trend and sweating assets, Tata Comm is focused on offering customised data solutions to enterprises. The high-margin vertical is expected to improve revenue mix by 4% to 65% over FY15-18, driving data revenue CAGR 14% over the same period, with operating margin improvement (310 bps) rising to 23% by FY18. The voice business, which has already