To the stakeholders
We are standing at an important juncture in the history of Subex.
Over the last four years a considerable focus was invested in transforming our Companyfrom a debt-heavy organisation to a deleveraged Balance Sheet. From a point in FY13 wherewe had around US$100 million in debt we progressively equitised our foreign currencyconvertible debt and overseas foreign currency debt. The result is that we stand with adebt of only US$ 28.76 million and a considerably lighter Balance Sheet. Subsequent to31st March 2017 the Company has repaid US$ 12 million loan thereby reducing theoutstanding debt to US$ 16.76 million. This transformed Balance Sheet empowered Subex toimprove its operating performance. During FY17 Subex reported a 10.81% improvement inrevenues and a 46.39% growth in EBIDTA. The Company repaid H21.1 crore of working capitaldebt in 2015-16 and H18.05 crore in 2016-17 which strengthened our net debt-equity ratiofrom 0.45 in 2015-16 and to 0.36 in 2016-17 translating into a rating upgrade by IndiaRatings IND BBB+ from IND BBB.
The year under review was marked by exciting realities across the global telecomlandscape. We have seen large global telcos acquiring media companies to launch newdigital services to own digital content and win the mindshare of millennial consumers whoexpect a compelling experience across all walks of life. In an emerging economy likeIndia we saw the emergence of a digital service provider who has disrupted the telecomworld by transforming data into a commodity service.
Subex has responded to this reality through a digital leap. As telcos embark on a newdigital transformation journey creating unlimited opportunities I foresee Subex playinga critical trust-based role in helping these companies graduate to stronger businessmodels enhanced customer experience and optimised costs.
I believe that the coming together of these macroeconomic factors and ourresponsiveness will pave the way for a new chapter in our existence called Subex3.0'.
The Subex 3.0 groundwork
Embracing changes proactively
Globally the telecom industry is undergoing a dramatic transformation. Revenue modelsof global telecom companies are graduating beyond traditional avenues like voice and data.Subscriber bases have begun to stagnate following the commoditisation of voice and dataservices and cannibalisation by over-the-top players offering similar services. Hencecommunication service providers are launching new digital services like cloud and hostingM2M and IoT security IP communication and collaboration data and analytics enterprisemobility finance and payments among others with the objective to enhance customerexperience improve loyalty and strengthen revenues. There is a growing consensus thatdigital is indeed the future. Digital transformation is enriching the customer experienceand increasing efficiency.
The advent of digitisation has transformed the way telcos work attracting engagementswith digital content providers insurance players app developers and media companies. By2020 digital services could account for more than 10% of the overall revenues of globaltelecom players. I believe that with great opportunity comes large challenges. Theemergence of new business models has widened and deepened risks. For instance Yahoo'smarket share declined following the leak of a confidential user base information arisingout of hacking. The result of this new and challenging ecosystem is a growing premium onend-to-end partner management' as opposed to the conventional partnersettlement' platform. Subex is attractively placed to capitalise on this reality. Subexenjoys an established presence in the assurance space; the Company's proven ability tocounter security risks are expected to enhance visibility and acceptability in the newsectoral environment. As telcos struggle with emerging business and technology challengesthey seek engagements with service providers enjoying access to a large data quantum and acorresponding analytics insight. Subex is best positioned to leverage this opportunity.Over the years the Company has aggregated a large volume of data from diverseinstallations which is mined to create new revenue streams generate critical insightsand graduate the end-user experience. This competence in the cutting-edge area ofpredictive analytics positions Subex as a long-term telecom analytics business partner.
Offering distinctive services
There is increasing evidence to suggest that telcos find the exercise of generatingdata and extracting usable information difficult on account of domain-related challengesand discrete databases among other reasons.
Subex is competently placed to address this reality. The Company possesses a large datawealth following years of engagement with large global telecom companies. The result is acompetent use of state-of-the-art analytics to generate business insights around RevenueProduct Customers and Risk. With digital transformation more devices are being connectedwith Gartner predicting that 8.4 billion connected things' will be in use in 2017up by 31% from 2016. In such a scenario increasing focus on IoT security. Subex's IoTsecurity solution monitors and generates alerts to threats in near real-time Internet ofThings (IoT) environments. The solution focuses on the concept of holistic cyberresilience' from asset and incident discovery and monitoring through response andrecovery.
Creating a well-governed organisation
Subex is among the few Indian listed companies in its niche that isprofessionally-managed around a robust business model. We created an operationalleadership team structure capable of managing business operations while fostering a senseof entrepreneurship.
Our simplified organisational structure empowers our people with enhancedaccountability and motivates them to innovate. The Company has integrated diversefunctions and I am pleased to state that this has resulted in enhanced organisationalefficiency and helped deliver a superior customer experience.
Roadmap for the future
Subex is optimistic of entering a larger number of enduring customer engagementstranslating into larger ticket contracts. The Subex management is confident that thisrepresents the start of an exciting phase in its journey which we call Subex 3.0. In thisexciting Subex 3.0 journey we will transition to becoming a telecom analytics solutionprovider from a business optimisation provider which will help telcos embrace digitaltransformation. In line with this strategy we unveiled a new logo which represents ourvibrancy energy and commitment to enhance value for our customers in the digital era.
Our proprietary gold mine of data coupled with our domain knowledge and technologicalcapabilities puts us in the best position to draw meaningful insights for our telcocustomers to help them drive new business models enhance customer experience and optimisetheir enterprises. This is an exciting phase in Subex's long and storied 25-year journeyand I look forward to what the future holds for the Company and Subexians.
Chief Executive Officer and