Along with TCS, the APO was also issued to the state-run ITI Ltd for this project
Along with TCS, the APO was also issued to the state-run ITI Ltd for this project. According to analysts, about 20 percent of the deal value will go to ITI.
Tata Consultancy Services (TCS) Stock Price: A consortium led by Tata Consultancy Services (TCS) has won a pre-purchase order from state-owned BSNL (Bharat Sanchar Nigam Ltd) to roll out a 4G network across India. In an exchange filing, the Tata Group company said that the prepayment order from BSNL is worth more than Rs 15,000 crore.
The consortium includes Tata Group’s telecom equipment manufacturing company, Tejas Networks, which will be responsible for the supply and maintenance of the Radio Access Networks (RAN) equipment.
Along with TCS, the APO was also issued to the state-run ITI Ltd for this project. According to analysts, about 20 percent of the deal value will go to ITI.
While the deal boosts TCS’s revenue, it could also dilute margin if other players are involved. But according to Pareekh Jain, founder and CEO of EIIRTrend, if Tejas Networks took over the production of the necessary equipment and hardware, the margin dilution would generally be less, as no other third party outside the consortium would get involved.
“The TCS-led consortium includes Tejas Networks and C-DOT. Invoicing for the other two consortium partners is done directly to them in this deal. So it won’t be a margin dilution for TCS, but stand-alone revenues may decline,” he added.
Shares of TCS gained 0.8 percent in intraday trading Monday, while those of Tejas Networks and ITI each rallied 4.2 percent. By comparison, the benchmark S&P BSE Sensex and BSE Information Technology indices rose 0.23 percent and 0.78 percent, respectively, at 10:05 AM.
This will be the IT services giant’s third major deal in 2023, following a $723 million deal from UK-based Phoenix Group and another with UK retailer Marks and Spencer (M&S). While the exact size of the deal has not been disclosed, the M&S deal was reportedly worth $1 billion.
In July 2022, the Union Cabinet had approved a Rs 1.64 lakh crore revival package for BSNL which includes cash support of Rs 43,964 crore and non-cash support of Rs 1.20 lakh crore.
The package consisted of three main elements: improving the quality of BSNL services, relieving the balance and expanding fiber coverage through a merger with Bharat Broadband Network Limited (BBNL).
This TCS-ITI deal is likely part of the same package. BSNL’s 4G services are expected to be rolled out across 100,000 towers or locations.
This deal had been negotiated since September last year.
In December 2022, the government had said that the state-run BSNL is working on its 4G saturation programme, with every village, which does not have a high-speed broadband connection, getting one in about a year.
“BSNL has already awarded many passive infrastructure contracts while it is in the process of finalizing the active infrastructure contracts,” then telecoms secretary K Rajaraman had said.
More than 24,600 uncovered villages were expected to be covered by the program, many of them in remote, rural and remote areas.
