The year 2021 began on a positive note for RailTel. It was successfully listed on Indian bourses, and continued to deliver a strong financial and operational performance. The accelerated digitalisation of businesses owing to Covid-19 opened up a plethora of opportunities for RailTel. Given the current trend, the company plans to focus on emerging areas such as internet of things (IoT)-, machine learning (ML)- and artificial intelligence (AI)-based services to drive future growth. In an interview with tele.net, Puneet Chawla, chairman and managing director, RailTel, talks about the company’s focus areas and growth plans…
What are some of the key operational and financial highlights of RailTel’s performance in the past six months?
The past six months have been historic for RailTel, as we floated our initial public offering in the month of February 2021 offering 87,153,369 shares. We received an overwhelming response from investors and our issue was oversubscribed 42.42 times. RailTel’s share was listed at a 16 per cent premium despite weak market conditions. Further, the price doubled from the issue price within a few days.
At a time when the global pandemic was slowing down business all over the world and the prolonged lockdown in India was hampering the execution of projects, we not only managed to stay profitable, but also achieved our highest-ever consolidated income. RailTel posted an income of Rs 14.11 billion during 2020-21, recording a growth of 21 per cent over the consolidated income of Rs 11.66 billion during 2019-20. Our profit before tax stood at Rs 1.97 billion and profit after tax at Rs 1.42 billion during 2020-21 on a consolidated basis.
What are your views on the evolving cloud space in India? How do you plan to leverage this opportunity?
With businesses going digital, the demand for secure and affordable cloud services is exceptionally high. We already have two UPTIME USA-certified Tier III data centres and our own cloud service, RailCloud, empanelled with the Ministry of Electronics and Information Technology (MeitY). MeitY’s empanelment not only assures best-in-class service to clients, but also enables us to bid and win data centre and cloud service projects of government organisations. We also provide off-site and on-site proactive security service through our specialised security operation centre, which is crucial to counter the ever-growing cybersecurity threats.
With the new draft data policy advocating data storage within the country, we see a huge opportunity for our bundle of services related to this domain.
How has been RailTel’s experience in the retail broadband space? What are some of the key demand drivers for this segment?
RailTel’s retail broadband service RailWire is a collaborative broadband delivery platform in partnership with local cable operators and broadband content providers. The demand for home broadband multiplied post the outbreak of the pandemic in April 2020. Offices were moved online and so were schools/colleges. The rising number of people working and studying from home drove the demand growth for home broadband. Also, due to prolonged lockdown and organisations announcing work-from-home for an indefinite period, a number of people moved back to their hometowns, increasing the broadband demand in Tier 2 and Tier 3 cities.
Given the demand growth, the RailWire subscriber base also grew multifold post 2020. As of August 2021, RailWire had a subscriber base of over 400,000 users, which grew 3.3 times since April 2020. We are now putting dedicated efforts into expanding the RailWire business in Tier 2 and Tier 3 cities, and rural areas where the demand and supply gap is huge. Our station Wi-Fi infrastructure, at more than 6,050 stations, has reached remote areas through which we are planning to extend to villages, bringing affordable broadband to rural populations.
What are your focus areas in the telecom domain? What are some of the fundamental shifts that you foresee in the post-Covid era?
The Covid-19 pandemic has accelerated the digitalisation of business operations, which have opened up a plethora of opportunities. Our portfolio is a mix of services like the internet-leased line, MPLS-VPN, data centre services, security operation centre-as-a-service, tower and rack and space collocation, Wi-Fi services, NIC e-office, HD videoconferencing, IT consultancy and retail broadband. These constitute a complete range of digitalisation services under one umbrella.
Due to the Covid-19 lockdown, these services saw an unprecedented year-on-year growth of 87 per cent in broadband revenue, 71 per cent increase in data centre revenue, 19 per cent in VPN and 20 per cent in HD videoconferencing. Given that the pandemic is not over yet and businesses are adapting to the new normal, we foresee growth in the demand for digitalisation and hybrid working. Our focus is now on generating more revenue from these telecom services that are on demand in the post-Covid era.
Going forward, what will be some of the new growth avenues and revenue opportunities that you plan to explore?
Given the current trend, focusing on digitalisation through IoT-, ML- and AI-based services is going to be our strategy for continuing on the growth trajectory. We already generate substantial revenues from sectors like railways, coal, defence and banking, which we intend to grow further. We are also exploring opportunities in several other sectors, especially education and healthcare. With the unprecedented challenge thrown by the Covid-19 pandemic, the education and healthcare sectors are in dire need of rapid digitalisation.
To digitalise healthcare, we are providing a hospital information management system, mHealth (a mobile health services app), tele-consultation services, etc. Currently, we are implementing this project for Indian Railways (IR) and the Karnataka government.
For the education sector, we have already implemented smart classroom solutions in 322 schools under the AP Sarva Shiksha Abhiyan, and an AI-based attendance system in 48,000 schools in 33 districts of Assam under the AXOM Sarbaa Sikhsha Abhiyan. We have also connected more than 730 educational institutions as a part of the National Knowledge Network project. We are also capable of offering AI-based cloud platform solutions for online remote proctored examinations, as well as an integrated academic management system, a learning management system, etc.
RailTel has been in the news for the station Wi-Fi project. When is it going to be completed? What are its plans for the future?
RailTel has transformed railway stations into platforms of digital inclusion by providing state-of-the art public Wi-Fi. This Wi-Fi network is one of the largest integrated Wi-Fi network in the world. On World Wi-Fi Day 2021 we provided Wi-Fi at 15 stations in the Kashmir Valley including Srinagar. The plan is to extend this network to all feasible stations and only a few hundred stations are left to be connected.
In the pre-Covid era, when train operations were normal, response to the service was phenomenal, with around 16.04 million unique users in fiscal 2020. In order to monetise this network, we have launched paid plans for Wi-Fi for users who would like to use it beyond the first 30 minutes of free usage or use it at a higher speed at a very nominal charge. We are also exploring other avenues to monetise this network further.
The government has approved the proposal to proliferate broadband through public Wi-Fi networks under the PM Wi-Fi Access Network Interface (PM-WANI). We will play an anchor role in the entire ecosystem through continuous engagement with regulatory bodies and industry players to enhance the evolving framework. We have registered as a public data office aggregator (PDOA), and completed payment channel integration with payment aggregators and inter-op testing to check seamless roaming from one PDOA network to anther. We are getting ready to bring internet to the masses.
We also have a unique opportunity to extend connectivity to nearby villages with this existing Wi-Fi infrastructure at stations, which will go a long way in bridging the digital divide. We have submitted a proposal to the Department of Telecommunications for connecting the feasible villages of Jharkhand and Maharashtra by extending the station Wi-Fi infrastructure.
What are the new opportunities for RailTel in the Indian Railways journey of modernisation and digital transformation?
Indian Railways has prioritised modernisation and digital transformation and RailTel has been playing a pivotal role in this journey. We are working on replacing the manual filing system by implementing NIC e-office; and providing IP-based video surveillance systems, content on demand, and management information systems at stations. We are exploring a number of new opportunities as well.
Indian Railways was recently allocated 5 MHz of spectrum, which will be used to build an LTE network, and we intend to work with Indian Railways to implement this high speed mobile communications corridor. This is going to be a Rs 70 billion project and we expect to get a big chunk of this work. In addition, this network is the foundation for the train collision avoidance system. Given our network capability and experience, we are well placed to work on this opportunity.
RailTel is also capable of providing IoT- and AI-based services. We are implementing a software-based solution for obtaining data inputs from IoT devices for measuring the water level of rivers for monitoring the safety of bridges, measuring the rail temperature and populating the data on the Indian Railway civil engineering telemetry application platform for real-time inputs and alerts. We have deployed an IoT-based condition monitoring and predictive maintenance system for signalling assets as POC at a railway station of South Central Railway. We are also providing e-tendering/e-auction solutions, and CCTV/drone solutions for project monitoring services.