Zylog to invest Rs 80 cr in Wi-Fi expansion

Zylog Systems Ltd, a Chennai-based IT solutions firm, would invest around Rs 80 crore in the fiscal year 2011-12 to expand its Wi-Fi reach to cover up to 180 towns under its wireless internet connectivity services afresh. The company's Wi-Fi business is managed by its wholly-owned subsidiary, Zylog Systems (India) Ltd.

The company, which has entered Wi-Fi business in 2009, currently has presence in around 154 towns in five Indian states including Tamil Nadu, Andhra Pradesh, Karnataka, Punjab and Gujarat.

"Considering the unlocked potential in these states, the expansion to additional 160-180 towns would also be in these five states," said S P Srihari, chief financial officer, Zylog Systems Ltd.

 

"Out of the Rs 80 crore investment proposed for the next fiscal year, around Rs 28 crore will be from internal accruals. We expect to raise the rest of around Rs 52 crore from financial institutions like public and private banks as term loans," said Srihari.

It has been focusing on tier-2 and -3 cities for market growth in the segment so far, and would continue to focus in these areas for growth in near future, he added.

Zylog is also expecting to finalise two contracts for establishing similar services in Africa in the fiscal year 2011-12.

"The areas selected for establishing services should have adequate density of population to make it success. Further, it should also be a place where Wi-Fi penetration is currently low. Considering this, we are focusing on Asian and African countries for market expansion," said Srihari. The company is also evaluating options to set up services in Sri Lanka.

The company is completing its first full year of operations in the fiscal year 2010-11. It is expecting a revenue of Rs 22 crore in the current fiscal. With the expansion to provide services to more area and expecting new subscribers to join in, the company targets to reach Rs 55 crore revenue in fiscal year 2011-12.

It also expects the revenue from Wi-Fi services to contribute to 10 per cent of Zylog's total revenue by fiscal year 2015-16.