RailTel recently completed its journey of 20 years in the information and communications technology (ICT) space. Over the years, the company has emerged as one of the leading high-growth ICT service providers in the country. It has contributed significantly to key government programmes, aimed at ushering in digital inclusion and bridging the digital divide. In recent years, it has also cemented its position in the retail broadband space. In an interview with tele.net, Puneet Chawla, chairman and managing director, RailTel, talks about the company’s business highlights and future plans. Excerpts:
What are the key highlights of RailTel’s performance?
We are a debt-free company and have been profitable since fiscal year 2007. We recorded our highest ever consolidated income (Rs 11,660.05 million) during 2019-20. This is a growth of 12.3 per cent over the consolidated income of Rs 10,382.66 million we recorded in 2018-19. We posted a profit before tax of Rs 1,847.6 million and a consolidated net profit of Rs 1,410.66 million in 2019-20. Our net profit margin of 12.5 per cent in 2019-20 was the highest among the key telecom and IT/ICT companies in India, while our operating profit margin was the highest among the key IT/ICT companies in India.*
How are your IPO plans progressing?
We have filed a draft red herring prospectus, dated September 29, 2020, in relation to the proposed initial public offering (IPO) of 86,653,369 equity shares. The IPO will be launched at a suitable time, subject to the approval of the regulatory authority and prevailing market conditions.
What are your plans, in terms of network expansion and investments, for the next two to three years?
We plan to continue to invest in expanding our network and deploying the latest technologies to enable a high capacity, next-generation network, in order to deliver sustained value to our customers and improve their experience with our services.
We are one of the largest neutral telecom infrastructure providers in India.* We have exclusive right of way for a 67,415 route km optic fibre cable network along the railway tracks. As of September 30, 2020, the network stands at 57,457 route km. The transport network is built on high capacity dense wavelength division multiplexing technology with an internet protocol/multiprotocol label switching network over it to support the mission-critical communication requirements of Indian Railways and other customers.
How have your operations been impacted by the coronavirus outbreak? What steps have you taken to normalise them?
When the country went into the unprecedented lockdown, we had to deploy crucial strategies to continue providing the essential services of telecom infrastructure, railway communication and home broadband to our clients. RailTel handles crucial communication systems, videoconferencing and implementation of e-office platforms, as well storage of important data for Indian Railways at its data centres in Gurugram and Secunderabad. Hence, it was all the more important for us to continue to keep the network and data centre operations stable, so that railway freight movement and communication between the offices of Indian Railways were not hampered.
We ran our data centres, four regional network operation centres, the central network operation centre and field operations with a skeletal workforce on the ground. The remaining teams worked from home using eOffice and videoconferencing. There was a rise in demand for bandwidth, broadband, and videoconferencing services during this period. With meticulous planning, we managed to sail through this phase smoothly.
How has your experience been in the retail broadband space? What are the key demand drivers? What are the expansion plans regarding the RailWire initiative?
RailWire, the retail broadband initiative of RailTel, is a collaborative model that ropes in local cable operators and other access network providers by utilising their last-mile connectivity. Owing to the rising number of people working from home and educational institutes conducting online classes, there has been a sudden growth in demand for home broadband. RailWire has also seen growth in the last few months. Between April 2020 and October 2020, the RailWire subscriber base grew 2.1 times.
We have been able to add 1,218 access network providers (ANPs) between April 1, 2020 and October 31, 2020. We had 4,579 ANPs as of October 31, 2020. With the growing number of ANPs, RailWire’s reach is improving in the retail broadband space.
How has the company been contributing to the government’s Digital India programme? What are some of the ICT-related projects that the company is currently working on, or planning to undertake?
To transform railway stations into platforms for digital inclusion, RailTel has provided state-of-the-art public Wi-Fi facilities at 5,819 railway stations across the country, as of October 31, 2020. This Wi-Fi can be used by anyone with a smartphone and an active connection, following verification through a one-time password sent via SMS.
We have received a phenomenal response from users, whose numbers have increased dramatically with time. We recorded over 14 million unique users per day with an average of 29 million user logins per month in 2019-20. In the same period, an average of 8,200 TB of aggregated data consumption per month, with an average data usage per user of 283 MB per month, was also recorded. In the three months up to June 30, 2020, the average data usage per user increased to 425 MB per month.
We are also the implementation partner of BharatNet (the erstwhile National Optical Fibre Network project) for its project to connect panchayats, as well as of the National Knowledge Network project. Furthermore, we have provided high speed Wi-Fi at 26 university campuses across India.
Additionally, we have implemented the NIC eOffice solution for 116,412 users across 106 Indian Railways establishments. The use of NIC eOffice in Indian Railways saw major growth during and post the lockdown period, as closed offices forced railway officials to adapt to a new digital filing system. During April-October 2020, the number of e-files grew 5.2 times and the number of e-receipts grew 6.9 times.
What has been the impact of the Covid-19 pandemic on the telecom market in India? Do you see some fundamental shifts across the market in the post-Covid era?
In our opinion, the Covid-19 pandemic has not only compelled businesses across industries to turn to technology-enabled platforms for safe operations and business continuity, but has also accelerated the adoption of digital imperatives. We believe that this may have some positive impact on the telecom market, as the demand for service bandwidth, telecommunication, virtual private networks, and data centres is now higher than ever. In fact, in our opinion, broadband is becoming a necessity nowadays.
Although the Covid-19 pandemic has restricted physical movement, individuals and companies still need to stay connected. Hence, the need to go digital is increasing by the day. The pandemic crisis has thrown up new challenges and has preponed the investment cycle in the ICT space. This is also an opportunity for the telecom market to grow its network and reach the maximum number of people.
Going forward, what are the new growth avenues and revenue opportunities that you will be exploring?
Alongside our current services, we are in the process of providing a bunch of new ones. We will soon start rolling out our content-on-demand (COD) service in premium/mail/express/suburban trains across India by preloading multilingual content on media servers installed in trains. With COD, passengers will be able to enjoy free or subscription-based, high quality streaming services on their personal devices during their train journey. We are also going to provide a Railway Display Network (RDN). The RDN will generate revenue by displaying contextualised advertisements for a pre-agreed duration and frequency. It is planned to be built and operated on a self-sustaining model, with no capital investment by Indian Railways.
Further, we are working on creating a Hospital Management Information System, an integrated clinical information system for Indian Railways’ 125 health facilities and 650 polyclinics across India, aimed at ensuring improved hospital administration and patient healthcare.
We are also currently working on a long term evolution (LTE)-based communication system for Indian Railways, which will be similar to the public protection and disaster recovery networks that employ LTE standards. Moreover, we intend to work with Indian Railways to develop and manage its proposed LTE network, which will comprise a private network along railway tracks and the high speed mobile communications corridor.
Additionally, we are in discussions with the Ministry of Human Resource Development for creating end-to-end e-learning systems and smart classrooms.
Finally, we are trying to spread our operations beyond the Indian borders by offering diversified services and solutions in the ICT field selectively, in jurisdictions outside India. We are currently evaluating a railway project in Bangladesh and various business opportunities in Mauritius. We intend to become a platform for regulators and fintech providers, and implement these applications in other developing countries.
(* This information is based on a CRISIL report providing an assessment of the key IT and ICT companies in India, including HCL Infosystems, RailTel, Sify Technologies, Tata Communications and Telecommunications Consultants India Limited.)