Along with TCS, APO was also issued to the state-run ITI Limited for this project.
Along with TCS, APOs were also issued to state-run ITI Limited for the project. According to analysts, around 20 per cent of the deal value will go to ITI.
Tata Consultancy Services (TCS) Share Price: A consortium led by Tata Consultancy Services (TCS) has won an advance purchase order from state-owned BSNL (Bharat Sanchar Nigam Limited) for deployment of 4G networks across India. In an exchange filing, the Tata group company said advance purchase orders from BSNL are worth over Rs 15,000 crore.
The consortium includes Tata group telecom gear maker Tejas Networks, which will be responsible for supplying and servicing the Radio Access Network (RAN) equipment.
Along with TCS, APOs were also issued to state-run ITI Limited for the project. According to analysts, around 20 per cent of the deal value will go to ITI.
While the deal is a revenue booster for TCS, it could also be a margin squeezer as other players come on board. But according to Parekh Jain, founder and CEO, EIRTrend, with Tejas Networks handling the manufacturing of the necessary equipment and hardware, margin dilution will be lower overall as no other third-party players are joining outside the consortium. .
“The TCS-led consortium includes Tejas Networks and C-DOT. The other two consortium partners in this transaction will be billed directly from them. So, it will not be down margin for TCS, but its standalone revenue may come down,” he added.
TCS shares gained 0.8 per cent in intra-day trade on Monday, while Tejas Networks and ITI gained 4.2 per cent each. In comparison, the benchmark S&P BSE Sensex and BSE Information Technology index were up 0.23 per cent and 0.78 per cent, respectively, at 10:05 am.
This will be the third major IT services deal in 2023 after UK-based Phoenix Group for $723 million and another deal with British retailer Marks & Spencer (M&S). While the exact size of the deal was not disclosed, according to reports, the M&S deal was worth $1 billion.
In July 2022, the Union Cabinet had approved a Rs 1.64 lakh crore revival package for BSNL, which included cash support of Rs 43,964 crore and non-cash support of Rs 1.20 lakh crore.
The package had three main elements – improving the quality of BSNL services, reducing pressure on the balance sheet and expanding fiber reach through merger with Bharat Broadband Network Limited (BBNL).
The TCS-ITI deal is likely to be part of the same package. BSNL’s 4G services are expected to be rolled out at 100,000 towers or sites.
The deal was in talks since September last year.
In December 2022, the government had said that state-run BSNL is working on its 4G saturation programme, where every village, which does not have a high-speed broadband connection, will be provided with one within a year or so.
The then telecom secretary K Rajaraman had said, “BSNL has already awarded a lot of contracts for passive infrastructure, while it is in the process of finalizing contracts for active infrastructure.”
Over 24,600 unregistered villages were expected to be covered under the programme, many of which are in remote, rural and far-flung areas.
