Tejas Networks to launch Rs 777-crore IPO next week

Telecom equipment provider Tejas Networks will launch itsRs 777-crore initial public offering (IPO) on June 14. The company is looking to raiseRs 450 crore by issuing fresh equity capital through the IPO. The issue will also comprise secondary share sale worthRs 326 crore. The Tejas IPO plans to cash in on the surge in demand for data services and need to fill the infrastructure gap in the country.

“India has little fibre optic connectivity, as telecom providers have traditionally focused on voice rather than data services. However, the amount of traffic on data networks has increased greatly over the past eight or nine months. And, we see a huge opportunity to extend our networks across India," said Sanjay Nayak, managing director and chief executive officer, Tejas Networks.  The optical fib e cables market in India is expected to grow at 13 per cent annually till 2021, due to high smartphone penetration and digitisation across platforms. The price band for the offering is fixed atRs 250-257 per share.

The company’s earnings before interest, tax, depreciation and amortisation (Ebitda) for FY17 stood atRs 165 crore and net revenue wasRs 865 crore.
 

Axis Capital, Citigroup, Edelweiss and Nomura are the investment banks handling the IPO. US-based Ciena Corporation, Bharti Airtel, Aircel and Bharat Sanchar Nigam are among Tejas’ top clients. Tejas is also one of the companies to provide infrastructure for BharatNet, the government-led initiative that will connect 250,000 villages through broadband.

“Outsourcing our manufacturing process while focussing on research and sales has greatly benefitted and helps us to maintain a capital high and asset-light model,” said Nayak.

On 5G readiness, Nayak said since their hardware consists of programmable chips, the equipment can support everything from 2G to 5G.Other companies vying for optic fibre markets include Ericsson, Nokia and Huawei.