RCom, Tata Tele bet on enterprise business to drive data growth

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Telecom operators such as Reliance Communication (RCom) and Tata Teleservices are focusing on enterprise business to derive more profit as larger players eye 4G rollout and payments bank license to amplify data demand and hence, sales revenue.

Last month, RCom announced partnership with US-based Jasper Technologies, which is a leader in internet of things (IoT) and machine to machine (M2M) category and said it would engage its group companies to adopt the technology first. In next five years, RCom expects cloud offerings and internet of things (IoT) under enterprise segment to touch about a fifth of its revenue.

M2M and IoT are connected machines which depend upon internet connectivity to perform a task. Telecom players such as Tata Tele said demand for M2M and IoT is expected to drive data demand and hence revenue growth.

"In early stage, business houses and enterprisers would be early adopters of M2M and IoT services. But later, I see, it will be more a B2C (business to consumer) business than a B2B (business to business) operation," said Pratik Pashine, head of enterprise with Tata Tele Services.

These services, part of its enterprise offering which include bulk data and voice call connection for enterprise clients, could add contribution of Tata Tele's enterprise division by couple of percentage each year from current level of around 30 per cent of total revenue, he added.

By using M2M and IoT services, customers would get to know the status of their machines such as tracking the route of a school bus or avoiding fatal accident due to industrial equipment by sending alerts in a case of a malfunction. These machines would use internet connection to send out messages, which is why these telecom players are eyeing to grab a pie of the market.

"RCom and Tata Tele use CDMA technology with which they can provide superior quality internet connectivity as good as 3G offered by the GSM players. So these players are leveraging on their existing asset to provide quality enterprise solutions," said Vivekanand Subbaraman, senior research analyst with HDFC Securities.

Both Tata Tele and RCom have said they are interested to provide these connectivity services to upcoming Smart Cities, which will have the features of connected machines and equipment.

Though nearly all telecom operators are focusing on increasing data demand to drive internet revenue and overall topline growth, the top three players have announced launching 4G services to boost their data consumption. RCom has earlier said it might foray into 4G, while Tata Tele said it is a possibility in future. But analysts have a different view after looking into the financial performance of the companies.

"I do not think they have the capital or required spectrum to upgrade into 4G. Both the companies have huge debt and operational numbers are also weak. So, their possibility into foraying into 4G is not going to happen in near future," said an analyst with leading city-based brokerage house.

RCom is a listed entity while Tata Teleservices Maharashtra Ltd, a subsidiary of Tata Tele is a listed.