Tata Comm to make voice biz contractual

Tata Communications plans to have 90% of its voice business from contractual customers

Tata Communications, formerly Videsh Sanchar Nigam Ltd, plans to have 90 per cent of its voice business from contractual customers over the next three years, up from 70 per cent now.

The company, which has a global network of submarine cables, is a leading provider of international wholesale voice communication services. It has 1,600 direct and bilateral relationships with leading international voice telecommunications providers.

With the onslaught of video calling solutions such as Skype and Google Talk, international voice traffic is growing at a meagre four per cent. Despite this, in 2011-12 Tata Communications handled 46.72 billion minutes of international voice traffic globally, an annual growth of 13.4 per cent.

The success of this growth lies in the company’s strategy to convert the business into a long term outsourcing model from a traditional spot model.

“We believe the voice market is shrinking and moving to IP to data and so on,” said Michel Guyot, president, global voice solutions, Tata Communications. “So, we are converting the commoditised voice business into a long term viable outsourcing model where customers can plug in for additional services,” he said.

A couple of years ago, the company signed a deal with BT to outsource their voice traffic. It provided BT with system and pricing tools along with global connectivity. “This way, we have gone beyond the voice business; it is more of a solution that we are offering,” said Guyot.

The company currently has 20 per cent of its voice business on long-term contract of one to three years, while 50 per cent is on a short-term contract of six months to one year. In 2011-12, the voice business contributed 48 per cent of the company’s total revenue of Rs 4,091 crore.

Apart from converting the business from spot- to long-term contracts, the company is also looking to provide new solutions to grow its voice business.

Tata Communications is collaborating with various video calling service providers to bridge the gap. The firm is interconnected with them and provides the service to terminate these calls. so that a user can do video calling from one service provider to the other. The video calling service has been growing exponentially at the rate of 45 per cent and the company hopes to benefit from creating service for this business.