Convergence Plus
Sunday, August 9, 2020
Tech Mahindra to bid for BSNL 4G tender, says Indian companies have capabilities

Airtel, Vodafone Idea, Tata Tele likely to pay AGR dues on Monday: DoT source Tech Mahindra and ITI are also looking to tap the global market with their upgraded 4G and 5G network equipment based on the success with the BSNL tender and implement the solution.

Tech MahindraNSE 1.59 % will bid for the revised tender to supply the fourth generation (4G) equipment to Bharat Sanchar Nigam Ltd (BSNL) partnering with state-owned ITI and other local companies, which have built expertise in building telecom software and devices, CEO C P Gurnani told ET.

Last week, BSNL cancelled the tender to upgrade the existing 4G network across 47,000 sites and building new capability in Delhi and Mumbai for Mahanagar Telephone Nigam Limited (MTNL) after the government barred state-run telcos from sourcing equipment from Chinese players Huawei and ZTE. ZTE had joined Nokia to bid for the tender, estimated to be around Rs 9,000 crore.

“We’re ready to build the digital highway for 4G or 5G. I believe that the technology is mature and we can do the transition in the network and create enough bandwidth,” Gurnani said.

In June, Tech Mahindra signed a pact with state-run ITI Ltd to jointly design and manufacture 4G equipment and work on building capabilities for 5G equipment for the local market.

TechM, India’s fifth largest IT services firm earns half of its $ 5.2 billion revenue from servicing telecom companies such as AT&T and BT Plc.

Gurnani said the consortium of companies led by Tech Mahindra would offer a virtualized network, where it has expertise and has partners in India.

“India has its capabilities but we haven't used it in a big format. I hope with this new focus, some of the Indian companies will get a chance to show their prowess,” he said on the move by the government to encourage Indian companies to take part in the tender.

In 2018, Tech Mahindra invested in Altiostar, a US company that develops software that allows virtualisation solutions on 4G and 5G networks enabling telecoms to build end-to-end web-scale cloud native networks. Bharti Airtel has deployed the Altiostar solution in India.

“Both core network and radio network could be virtualized,” said Gurnani. “While 70% of the component could be virtualized; 30% will still remain in the hardware (to be manufactured by ITI).”

Tech Mahindra and ITI are also looking to tap the global market with their upgraded 4G and 5G network equipment based on the success with the BSNL tender and implement the solution.

“We’re waiting for the new tender and this partnership is for the domestic market. We will also try to globalise the solution for the international markets,” siad Gurnani. (Source: Economic Times)

Thierry Delaporte has tough task at Wipro, where he takes over as CEO on July 6

HealthifyMe Thierry Delaporte needs to “re-energize” the leadership team, turnaround failing businesses and drive growth. Thierry Delaporte needs to “re-energize” the leadership team, turnaround failing businesses and drive growth in the midst of the pandemic for Wipro, where where he takes charge as the chief executive officer of Wipro on Monday, say analysts.

Delaporte, first non-Indian CEO at Wipro and India's IT industry, will have to turn around business verticals such as healthcare and energy and utilities and regain the “diminishing” market share of the company. Wipro, which has seen four chief executives including two Joint CEOs in the last decade, has lagged its peers in growth. It lost its third position to HCL Technologies in the previous fiscal year.

“Thierry Delaporte needs to re-energize the leadership team and give them a strong direction to keep their critical clients happy - and he will surely spend the first few weeks talking with as many as possible,” said Phil Fersht, chief executive, HfS Research.

Delaporte, who joined Capgemini in 1995, through its acquisition of Sogeti and spent nearly 25 years at the French tech services major, is well-known in the industry for his excellence in driving growth in banking and financial services. Delaporte, who helped integrate iGATE with Capgemini quit after he lost out to Aiman Ezzat for the top job.

One of the significant tasks is getting Wipro back to industry matching growth, said Peter Bendor-Samuel, chief executive, Everest Group, a US-based IT research and advisory firm. “This is going to be made harder as he is taking over in the middle of the Pandemic and his travel and ability to meet with key leaders as well as customers is going to be complicated by travel restrictions. Having said that Thierry (Delaporte) is a very capable executive and will be able to use his Paris base as a great bridge in time zones between India and the US,” said Bendor-Samuel.

Abidali Neemuchwala, who stepped down as Wipro CEO in June after a four year stint, struggled to revive fortunes of Wipro, despite spending over $ 1 billion in acquisitions and restructuring businesses.

Fersht of HfS listed out a few key steps Delaporte needs to focus to turn around things at India’s fourth largest software services exporter.

“At least for the first few months, opening up the war chest may seem like the natural way for a new CEO to make a stamp on a firm. But with Wipro, acquisitions have a checkered past, and even those that have worked have taken several years to fully embed. Instead, the firm should focus on turning around creaking business lines – and above all, get them talking to each other. A process Abid started, but sadly failed to finish,” said Fersht.

He believes that the company under Delaporte should build a “distinctive vision for the modern enterprise” much in line with what KPMG has as its powered enterprise, TCS as its Business 4.0, HCL Tech has Mode 1,2,3 redefining the traditional software services and digital technology-led services. (Source: Economic Times)

Global Fintech Funding Declined during COVID-19, Investors Now Focused on Mature Fintechs like Robinhood and Stripe: Report

HealthifyMe The global Fintech industry is being transformed by the COVID-19 outbreak and resulting socio-economic problems and challenges, according to a recent report from CB Insights.

As mentioned in the report, the first quarter of this year was quite difficult for the financial services sector – which may be due to changes in consumer behavior after governments began enforcing lockdowns and asking people to observe safe distancing measures.

CB Insights confirms that Fintech funding declined during the Coronavirus crisis, as many investors pulled back from their commitments due to economic uncertainty.

The report noted:
“While regulations and legislation are geographically dependent, there are several noteworthy developments around the world. Firstly, regulators in the US are becoming more amenable to Fintech companies acquiring bank charters, as we’ve seen with Lending Club and Square.”

The report added that the research firm is keeping a close eye on global virtual currency and stablecoin regulations in order to “see how crypto plays out.” CB Insights is also watching the global Open Banking regulations and their potential impact on the Fintech sector.

The report also summarized key trends from the insurance and cybersecurity space, by noting: “Traditional commercial insurance products do not cover data breaches, network interruptions, or other cyber risks. While companies are heavily investing directly in cybersecurity technologies to prevent these attacks, they’re also increasingly purchasing cyber insurance policies to protect themselves in case of an attack.”

The report pointed out that the “complexities of these risks and the lack of extensive historical claims data” have created “uncertainty” in the global cyber insurance market. This emerging market is valued at approximately $20 billion, according to CB Insights.

The report also mentioned that after huge rounds for firms like Stripe and Robinhood, the Fintech funding landscape looks like it’s in “a holding pattern.”

Fintechs appear to be drawing on all available financing resources, such as “extension” rounds (for example, Stripe’s Series G). It seems that investors are focused on remaining liquid and may not be too keen to commit capital to early-stage ventures, the report revealed.

It confirmed:
“[Right now,] investors are putting money in later-stage, more mature companies (like Robinhood) with clear unit economics and paths to profitability. In general, we expect continued uncertainty and funding pullbacks.”

The global Fintech market is expected to grow at a compounded annual growth rate (CAGR) of about 20% and is projected to reach a market value of approximately $305 billion by 2025, according to a June 2020 report from Research And Markets. (Source: Crowdfund Insider)

Covid-19 impact: Q1 to be a washout for IT sector, say analysts

Pre-Bookings open for Samsung Galaxy S20, S20+, and S20 UltraIndian IT firms will face the full impact of business disruption in the US and Europe due to the Covid 19-induced lockdown in the quarter to June, as analysts expect companies to report 5-10 per cent drop in revenue due to clients cancelling or putting off discretionary spending on technology in the three-month period.

Sectors such as travel and transportation, oil & gas and retail have been the most affected due to the lockdown in the three-month period, with several companies declaring bankruptcies due to the loss of their business.

“(It) is a washout quarter that captures the full impact of uncertainty in business from Covid-19 led by lockdown, supply side compression and demand pullback. We expect retail, travel and transport, hospitality and oil & Gas verticals to be severely impacted and do not expect recovery in Q2 also,” Aniket Pande, IT sector analyst with brokerage Prabhudas Lilladher wrote in a report. “We expect the revenue trajectory to show resilience in Q2FY21 before starting growth (<+1 QoQ USD growth) from H2FY21.”

Tata Consultancy Services, India’s largest IT services firm will be the first company to declare first quarter results on July 9. WiproNSE 0.27 %, which will see its new Chief Executive Thierry Delaporte taking over this week, will announce results on July 14.

TCSNSE 1.97 % is expected to see revenue drop by 6 per cent, InfosysNSE 0.81 % by 5 per cent, HCL Technologies 8 per cent, Tech Mahindra by 9 per cent and Wipro by 7.5%, brokerage firms said in their reports.

These companies will also see margins being affected during the quarter, even as they have taken steps to cut costs and rein in expenses, said Madhu Babu, IT analyst at brokerage Centrum.

Analysts, however, believe certain business segments can be immune to the impact of coronavirus and revive demand faster than others.

Banking and financial services industry (BFSI), healthcare, non-discretionary retail such as grocery, and hi-tech verticals will be more resilient, said Prasad of HDFC Securities. William O Neil India, an investment adviser, said though the new order flow may remain low in 2020, post-pandemic technology development can prove a silver lining for India’s IT sector.

“BFSI expects a strong opportunity for cloud, data services, and new digital bank capabilities after the pandemic. In April, JP Morgan released its annual report for 2019. The company disclosed that it would increase its technology spends by 4% versus the last year, despite the pandemic. Of this, 50% would be dedicated to ‘new’ capabilities,” it wrote in a report.

The good revenue numbers of Accenture, which raised the lower end of its guidance last week, has a positive impact for Indian IT, as it indicates more clients are spending on technology and taking their business digital.

Top executives of Indian IT services firms have expressed that demand for technology outsourcing in some sectors has offset slowing growth in a few sectors impacted due to the pandemic.

“I'm pleasantly surprised by the speed with which people are adapting to digital. In a lot of ways that seems to be working to our advantage,” Tech Mahindra CEO C P Gurnani said in a recent interview.. “ Auto, aerospace, travel and transportation businesses are hugely impacted and that part of the business there is degrowth. But there is a lot that is happening in alternate business and service offerings.”

The company’s back office and cloud business, he said, is seeing growth on the back of increased adoption of digital technologies by customers.

Infosys CEO Salil Parekh said while there is a short term impact, the company is confident of growing faster in the medium and long term.

“Sectors like retail, manufacturing and the travel-hospitality are the ones most impacted. Financial services, energy, utilities are relatively less impacted. Communications, hi-tech, life sciences, healthcare have seen slightly better opportunities,” Parekh told shareholders at the company’s AGM on June 27. “There will be some overall negative impact as a result of COVID-related developments, in the near-term, but in the medium and long-term, we see opportunities for clients as they fast-track their digital transformation journey, consolidation of vendors and some captive activity.” (Source: Economic Times)

Tariff hike in telecom 'inevitable', two rounds likely in 12-18 months: EY

Sony India Feels the Heat from Chinese Cos, Cuts Over 120 JobsThe industry is talking of ARPUs going up anywhere from 60 per cent to 80 per cent over next two-three years, and that can happen by way of tariff increase

Tariff hike in the telecom sector is "inevitable" as the current structure does not allow reasonable returns for operators, although a lot would depend on the timing given the "unprecedented" scale of the Covid-19 pandemic and resultant affordability crisis, according to EY.

Acknowledging that an immediate tariff increase may not be feasible in the current setting, Prashant Singhal, emerging markets Technology, Media & Entertainment and Telecommunications (TMT) Leader at EY said two rounds of tariff hikes can be expected in the next 12-18 months, including one in the next six months.

"Tariff hike is necessary. Telecom as spend for consumers is fairly low, and tariff hikes should likely happen over next 6 months, I am not saying it must, but sooner the better...

"One has to keep in mind the economic situation and affordability factor... but over 12-18 months, you have to have two rounds of tariff hikes, including one in the next six months, to ensure sustainability in the market," Singhal told PTI.

Whether such a hike comes through regulatory intervention or industry action remains to be seen, but the financial health of the operators necessitates revision in tariffs, he said.

"Fundamentally, if the sector has to do well, what you require is fair price for service which is being offered by companies.

"There has been one revision of tariffs in December, and if one or two rounds of upward revision happen to make it at least at par with other emerging markets, in a way that consumers don't feel the pinch, that is where the revival of the sector will happen," Singhal said.

The industry is talking of Average Revenue Per User (ARPUs) going up anywhere from 60 per cent to 80 per cent over next two-three years, and that can happen by way of tariff increase, and moving away from fixed price plans to data based on usage or consumption.

Tariff hike is inevitable, and the issue is one of timing, he asserted.

"If we did not have the pandemic, we may have seen a hike in June itself. Now because of the pandemic, which is unprecedented and extraordinary, we may see a tariff hike in next six months but it is inevitable, as current structures don't allow companies to have reasonable return on capital employed," Singhal added.

Admitting that now may not be a suitable time for initiating tariff increases, given the "affordability crisis", Singhal said that things are speeding-up and several measures have been taken by the government to ensure that the economy is back on track. (Source: Business Standard)

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