State-run Indian Telephone Industries [ITI] Limited, a core telecom and electronics manufacturing company, has come a long way in terms of diversifying its operations. Over the years, the company has chalked out strategies to meet the country’s telecom requirements and played an active role in key government initiatives such as Digital India, BharatNet and Network for Spectrum (NFS). The company has been reinventing itself to compete effectively in a dynamic market scenario and expand its footprint in new markets. It has recently signed an MoU with the Department of Telecommunications (DoT) to boost investments in emerging areas such as broadband and IoT, and provide a greater thrust to telecom equipment manufacturing. ITI has also set up a telecom testing facility in Bengaluru in collaboration with DoT to enable safety and security of telecom equipment in line with the requirements of the National Digital Communications Policy, 2018. Recently, the Securities and Exchange Board of India granted approval to ITI to float a follow-on public offering to help the company strengthen itself financially. In an interview with tele.net, K. Alagesan, chairman and managing director, ITI Limited, discusses the company’s focus areas, current projects, challenges and future plans…
How has the company performed during the past one year? What have been some of the key achievements?
ITI improved its financial performance last year compared to 2017-18. Its turnover improved by 11 per cent to reach Rs 18.94 billion and profits stood at Rs 1.11 billion during 2018-19.
ITI has completed supplies of gigabit passive optical network (GPON) equipment to approximately 47,000 gram panchayats under Phase I of the BharatNet project. Further, 80 per cent of all installation activities are complete. It has also completed 85 per cent of the optic fibre cable (OFC) laying work under the NFS project. The implementation of other projects such as MahaNet and GujaratNet under Phase II of the BharatNet project is in progress.
What are ITI Limited’s current focus areas?
ITI is a core telecom and electronics manufacturing company. Besides telecom products, it has been focusing on products such as smart energy meters, smart cards, OFC and high density polyethylene (HDPE) pipes. The company recently won major orders for the supply of smart energy meters and these are currently under execution.
ITI has also started focusing on emerging technology areas such as IoT.
What trends do you foresee in the OFC market? What role is ITI playing in this space?
As per a recent report, only 30 per cent of the telecom towers in India are connected with optical fibre backbone. There is a plan to fiberise the remaining towers and this will open up a huge market for OFC in the country.
We are working on an OFC laying project for the NFS (13,000 km) and have completed 85 per cent of the work so far. The company has set up OFC and HDPE duct manufacturing facilities with an annual capacity of around 30,000 km and around 15,000 km respectively. ITI plans to expand these facilities in order to increase the manufacturing capacity.
How is ITI contributing to government programmes such as Digital India, Make in India, the Smart Cities Mission and BharatNet?
Our contribution to key government programmes is as follows:
The BharatNet project is one of the major projects under Digital India. It aims to provide broadband connectivity to every gram panchayat in the country. ITI is a major participant in this project. We have successfully completed supplies of GPON and solar equipment to around 47,000 gram panchayats under Phase I. The installation activities are nearing completion. As part of Phase II, ITI is executing the MahaNet and GujaratNet projects.
Further, ITI has been running a data centre for the past 10 years and is now expanding the same with additional rack space (1,000 units) so that companies and organisations can use it for keeping data safe and within the country. The company also offers Aadhaar authentication services. It has set up a smart card manufacturing facility to contribute to the country’s digital economy.
Make in India
ITI has set up manufacturing facilities for OFC, HDPE, solar, electronic and telecom equipment. We offer a complete range of in-house manufactured products such as GPON, OFC, solar equipment, and Wi-Fi and radio modems that are being used in Phase II of the BharatNet project. We also supply encryption products for the defence forces, which are designed, developed and manufactured by the company. We are manufacturing mini-PCs and have set up facilities for producing set-top boxes. In addition, the company offers contract manufacturing services for electronic assemblies, printed circuit boards, mechanical fabrication and 3D printing.
Smart Cities Mission
ITI supplies smart energy meters to EESL and these eventually become a part of smart city projects. The company has ambitious plans to address the needs of the smart city segment in the future.
What opportunities do you foresee for telecom equipment manufacturers with the introduction of 5G in India? How do you plan to leverage these?
5G has been making waves in the Indian telecom sector and trials are expected in 2020. It is very encouraging to see that the standards bodies in India are taking initiatives in areas such as low mobility large cell (LMLC) in line with the International Telecom Union standards. It is expected that 5G deployments will start from 2020-21. ITI is in discussions with academic institutions and the IESA to make a foray into 5G equipment manufacturing and to encourage 5G start-ups in this direction.
What steps is the company taking to compete with foreign vendors in the Indian market?
ITI has seven decades of experience in equipment supply and service delivery in India. The company is leveraging this through partnerships with potential start-ups/technology vendors to tap business opportunities and secure orders.
What are some of the challenges faced by the company? How do you plan to address these?
Although the turnover and profits have improved during the past two years, ITI still has working capital challenges to deal with. We are working out plans with banks to mitigate these challenges. The company also has the task of building manpower capabilities within the organisation for upcoming technologies.
What is your outlook for the Indian telecom market?
The Indian telecom industry is the second largest telecom market in the world and is expected to grow at the same pace in the coming years. With the emergence of new technologies such as 5G, IoT, artificial intelligence and machine-to-machine, the Indian telecom market is poised to become more vibrant. We can expect many more business opportunities to open up as a result of these technologies.
What will be the company’s growth plans and strategy for the next two years?
ITI has a sound order book position. The company plans to execute the available orders within stipulated timelines. It also plans to enhance its order book, improve its revenues and maintain steady growth in the coming years.