Following the integration of Tata Group's five telecommunication subsidiaries - VSNL, VSNL International, Teleglobe, Tata Indicom Enterprise Business Unit and Cipris - under the Tata Communications brand name, Tata Communications has announced that it will inject $2 billion over the next three years to fuel its global expansion plans with specific focus on the new world of IP, MPLS, Ethernet, and managed services.
Tata Communications reflects the 130-year strong heritage of trust and leadership that the Tata Group brings to its customers, said Subodh Bhargava, chairman of Tata Communications. The new identity is a major step in our commitment in building long-lasting relationships with our customers, partners and stakeholders.
We are tremendously pleased with the launch of the new brand, said N. Srinath, CEO and managing director of Tata Communications. The Tata Group has a long and highly respected history of achievement and contribution to the many markets, industries and communities it serves. Tata Communications will continue to build on our track record of successes, strong global investment strategy and India and emerging markets strengths to grow globally in its targeted segments.
Tata is boosting its bandwidth capabilities as it sees higher contributions from emerging markets like China, parts of Europe and Africa, Srinath said.
We are seeking to grow our enterprise services business globally ... Within India, we are building in-city infrastructure and focusing on broadband, he added.
According to Srinivasa Addepalli, senior vice-president (corporate strategy), Tata Communications, the company will invest around $1 billion in the submarine cable and WiMax businesses and another $1 billion for network expansion.
We're confident of achieving a broadband market of 25 to 30 million by 2012, Addepalli said.
The investment will be funded through internal accruals and borrowings, he said.
According to a company official, Tata Communications is building a $250 million TGN (Tata Global Network) Eurasia Cable System linking Mumbai directly to Paris, London, and Madrid via Egypt; and a $200 million TGN-Intra Asia submarine cable linking Singapore, Hong Kong, and Japan with an additional connection to the Philippines.
Tata Communications, which is a part of the India-Western Europe-Middle East (I-ME-WE) consortium building a cable that connects India to France via the Middle East, will also invest $50 million in the Seacom Ltd. submarine cable project, which will link several African countries to international cable networks, the official said.
The remaining $500 million would be invested for WiMax operations, which were launched in Bangalore. The company would also be launching the services in other cities, starting with Chennai, Delhi and Hyderabad in the next few months, he added.
Another $1 billion would be invested in multi-protocol label switching (MPLS) and rolling out ethernet networks across the world. This will ensure a scalable and secure network, through which the company will provide advanced services, the official said.
The company is expected to launch a $4-5 million advertising blitz in the next three months through direct marketing initiatives to communicate the integration of its businesses to the market.
Like all companies using the Tata brand name, Tata Communications will have to pay Tata Sons a fee of 0.25 percent of revenues or 5 percent of profits before tax annually under a brand equity and a business promotion scheme.
The NYSE-listed Tata Communications, which has offices in 80 cities in 40 countries worldwide, competes with telecom majors such as BT, AT&T, iBasis and Verizon in its international operations, and with companies such as Bharti Airtel and Reliance Communications in India.
The company bought network service firm Teleglobe International 2006 and Tyco International's global undersea fiber optic cable network unit in 2005. Presently it is witnessing higher contributions from China, Europe and Africa, where it has invested in South Africa's Neotel.
Presently, the company is in the process of completing additional submarine cable systems connecting emerging markets in Asia, the Middle East and Africa to Europe to meet the demands of broadband and enterprise customers over the next five to eight years.
Tata Communications is a part of India's most respected business conglomerate, the Tata Group, which has business interests that include steel, automotive, technology, consumer products, energy, hospitality and beverages.
The Tata Group reported revenues in 2006-07 of $28.8 billion, about 3.2 percent of the country's GDP, and a market capitalization of $65.32 billion. The Tata Group has 27 publicly listed enterprises and operations in more than 80 countries across six continents and employs over 300,000 people.