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Interview with Partho Banerjee, President and Managing Director, HCIL

January 08, 2014
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Hughes Communications India Limited (HCIL), the oldest player in the VSAT space, offers innovative and customised solutions for the fast moving consumer goods industry, the banking and financial services sector, the Restructured Accelerated Power Development and Reforms Programme, and regional rural banks. It has won several big contracts, especially from the banking industry, over the past year. In an interview with tele.net.in, Partho Banerjee, president and managing director, HCIL, talks about the company’s performance and future plans, and issues and challenges faced by VSAT companies. Excerpts…

How has HCIL performed in the past year?

HCIL continues to be the leading service provider in all three business segments – enterprise satellite networks, satellite broadband services for small- and medium-scale enterprises, and interactive distance education. The company has witnessed double-digit growth, driven by the strong uptake of its satellite services.

What have been the company’s key achievements during 2013?

HCIL has deployed over 80,000 VSATs on a shared hub basis. This is a milestone for the country’s leading VSAT company as well as for India where there are huge demand-supply gaps in terms of reliable, always-on broadband connectivity.

A key achievement in 2013 was its ability to maintain strong business growth despite the challenging environment – low government spending, economic slowdown and uncertain regulatory environment. We fared better than our competitors in the VSAT space, achieving a market share of over 60 per cent in 2013-14. However, we faced several challenges in meeting customer expectations in terms of network roll-out and service delivery.

What are some of the key contracts signed by the company in the past year?

One of the key contracts was awarded by the Ministry of Finance. The eight-year contract worth about Rs 2 billion involves connecting and managing 30,000 automated teller machines (ATMs) of state-run banks through a broadband satellite network. The contract is part of a larger project, under which nine companies have been selected to install and manage around 63,000 ATMs across India. The project is aimed at increasing the country’s ATM density to increase financial inclusion.

HCIL has also won a five-year contract worth Rs 330 million to connect over 3,000 National Bank for Agriculture and Rural Development (NABARD) branches across the country through a broadband satellite network as well as to provide managed services.

In another development, C-Edge, a joint venture between Tata Consultancy Services and the State Bank of India (SBI), has selected HCIL to provide turnkey networking solutions and services to connect various district central cooperative banks and state apex banks in the country.

Other projects won by the company in the past year include the Defence Communications Network project, and branch expansion projects from banking customers like HDFC Bank, the Bank of India, SBI, Punjab National Bank, ICICI Bank, Axis Bank, Andhra Bank, NABARD and the United Bank of India.

What are the key focus areas of HCIL? What are the communication solutions offered?

HCIL’s focus is to leverage its robust satellite service coverage, solutions and capabilities to meet the growing broadband communication and networking needs of the country’s corporates and government institutions. We offer managed services with value-added offerings to position ourselves uniquely in the market. The key market segments that we cater to are banking, education, digital cinema, defence, e-governance, oil and energy, and manufacturing.

We also offer various communication solutions like virtual private networks and services for backup, multicasting, disaster management, hosting, network management and broadband. Unlike a traditional telecom operator, HCIL’s service to its customers is always managed and value added, integrating application with the network seamlessly in terms of application support, response time, bandwidth optimisation and management and maintenance services.

What are HCIL’s capex target and investment plans for 2013-14?

HCIL has been investing in building and expanding satellite hub centres and customer service operations across the country. Typically, investments in the range of $4 million to $5 million are made every year in augmenting the capacity of network operation centres and building service infrastructure, etc.

Which sector constitutes the majority of the company’s customer portfolio?

The majority of the revenue is contributed by the services sector, which is dominated by the banking sector with over 40 per cent of the service revenue.

What are the key trends in the Indian VSAT market? What are some of the demand drivers for these services?

The Indian VSAT market is annually growing at over 20 per cent, facilitated by government and corporate initiatives for rolling out communication services in remote areas and a considerable improvement in the socio-economic condition of citizens.

We are also looking at sectors like banking, organised retail, gas retail and automation. Government initiatives in the  areas of rural development, education, health, etc. will play a major role in driving VSAT growth.

How has the competitive landscape evolved in the Indian VSAT market?

The Indian VSAT market primarily consists of three players including HCIL, unlike in the past when several companies were operational. The technology and business are specialised and must be incorporated as core focus areas in order to sustain growth and profitability.

What are some of the operational challenges faced by HCIL?

There are several operational challenges in the VSAT segment. These include regulatory issues and challenges faced in providing quality service in remote areas where the infrastructure is extremely poor. While customers understand issues related to infrastructure, it becomes difficult to explain the lack of transponder capacity and regulatory support for service implementation. We are trying to address some of these issues including implementation of the “open skies” transponder policy and simplification of national long distance satellite backhaul and connectivity services.

What are the other challenges faced by the company?

The key challenge is to increase the market share while keeping an eye on the bottom line. Other concerns include cost management through innovation in technologies and fulfilment strategies as well as the introduction of relevant products and services to cater to the business needs of enterprises.

What are the company’s expectations for 2014 and what are the growth targets for the next five years?

We expect double-digit growth in revenues and profits in the coming years. We intend to make large-scale investments in satellite technologies and infrastructure after obtaining government clearances.

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