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Sify Technologies: Looking to regain lost ground in the ISP segment

June 01, 2012
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Sify Technologies has come a long way from being an internet service provider (ISP) in the 1990s to establishing itself as an information and communication technology (ICT) player. Today, it is present in more than 1,000 cities and towns and operates over 1,500 base stations. 

The country’s first private ISP to offer dial-up service, Sify commenced commercial operations in 1998. The company provides internet and data services as well as online content; has developed a range of managed enterprise services, solutions and applications as well as hosting and voice platforms; and enables system integration.

In the past few years, however, the company has been overtaken by incumbents Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited as well as private operators such as Bharti Airtel and Reliance Communications in terms of internet market share. According to the Telecom Regulatory Authority of India, as of December 2011, Sify ranked 13th in the ISP market.

Nevertheless, the company has maintained its focus on enhancing operations and diversifying its business segments. Over the past year, it has focused on forming partnerships, launching products and services, and expanding its global footprint.

The enterprise space, in particular, is a key focus area for the company and, according to Raju Vegesna, chairman and managing director, Sify Technologies, accounts for 90 per cent of its business.

Reiterating its commitment to this segment, the company recently launched the Sify Videomeet videoconferencing-as-a-service platform in collaboration with US-based Vidyo, Inc.

The service allows users to initiate multi-point video collaboration without dedicated networks and through multiple devices such as mobile handsets, tablets, desktops and laptops. It is priced at about Rs 3 per minute.

Recently, the company also launched the Sify mystorage solution for its enterprise users. It is a cloud-based online storage and backup solution that enables users to protect files stored on the computer against virus attacks.

To increase the reach of its managed enterprise and data centre services, Sify recently announced the operational readiness of its undersea cable landing station in Mumbai. The system has a capacity of up to 10 Tbps on certain cable sections and can, therefore, accommodate the rapid growth in voice and media traffic (internet, telephony and video) originating from and terminating in the Middle East as well as African and European markets.

The company would be the exclusive landing partner for Gulf Bridge International (GBI), which is a Middle East-based private submarine cable operator.

To expand its global presence, the company has formed several partnerships over the past year. Under its partnership with Saudi Telecom, Sify would provide its customers and partners a wider network reach and higher efficiency services. Also, the ICT player has signed agreements with Japan-based KDDI and Saudi Arabia’s STC to support their network expansion in India.

Sify has also sold off its stake in MF Global Sify Securities India in an all-cash deal to Singapore-based financial service company, the Phillip Capital Group. Sify holds 29.85 per cent stake in the joint venture with MF Global, which undertakes online and offline equity and derivative trading for retail clients besides other clearing services for financial institutions. According to company officials, the deal is expected to be concluded in three to four months.

Financial performance

The company is on a strong financial wicket. Its promoters infused fresh capital of Rs 500 million to support its investments in the last quarter of 2011-12, thereby taking their total investment to Rs 2,500 million.

For the year ended March 31, 2012, the company posted revenues of Rs 7,742 million. Revenues from enterprise services stood at Rs 6,681 million, a 16 per cent increase over the previous year.

Revenue from the software services business stood at Rs 671 million, while that from commercial and consumer services was Rs 390 million. The company’s earnings before interest, taxes, depreciation and amortisation for 2011-12 was Rs 527 million, as compared to Rs 235 million in the previous year. Its wholesale voice business, carrier business and IT services revenues grew by 21 per cent, 20 per cent and 24 per cent during this period respectively.

While the net losses dropped to Rs 327 million from Rs 520 million, Sify’s capex for 2011-12 stood at Rs 928 million.

Industry view and the road ahead

Overall, industry analysts consider Sify Technologies to be a strong player, given its extensive network and brand equity. According to Vegesna, the most important goal is to make Sify into a billion-dollar company (from a $200 million one) in five years by growing the data centre and connectivity business and adding business analytics to its portfolio.

Also, Sify plans to continue investing in its managed services portfolio. This, according to company officials, will be supported by the organic expansion of its network and the commissioning of two data centres at Mumbai and Delhi in 2012-13.

Moreover, the company is looking to increase its footprint to Tier II and III cities, as well as expand fibre access in Tier I cities. The company will also increase its footprint in the e-learning segment in Asia.

In sum, Sify is looking to pull out all the stops to consolidate its position in the ISP industry.

 
 
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