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TCIL - In rapid expansion mode

October 15, 2009
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Incorporated in 1978 by the Department of Telecommunications, telecom consultancy and engineering company Telecommunications Consultants India Limited (TCIL) has bagged a number of domestic and foreign projects in the past few months.

According to the chairman and managing director of TCIL, R.K. Upadhyay, the company is working on several telecom projects in Africa, the Middle East and India. Its latest foreign projects include setting up a pan-African e-network project (estimated to cost Rs 5,429 million); a cyber city project in Nigeria; a fibre-to-the-home project in Kuwait and the UAE; a Ku-band satellite project in Nepal; and a tele-medicine and tele-education project in the SAARC countries (estimated at Rs 30 million). In the past, the company has undertaken several international turnkey telecom projects in almost 45 countries. The major ones include rehabilitation of telecom systems after the Gulf war in Kuwait; setting up of a synchronous digital hierarchy optical fibre ring network for Mauritius Telecom; and various projects in Ethiopia.

At home, TCIL is currently undertaking a national internet backbone project for Bharat Sanchar Nigam Limited (estimated at Rs 1,630 million) and a virtual university project for the University of Madras.

Primarily involved in the areas of telecom and information and communications technology (ICT), TCIL has recently diversified its portfolio to include turnkey projects in the power and civil infrastructure sectors. For example, it is at present involved in a highway project in Assam.

Major plans
The government is considering listing TCIL with an initial divestment of 10 per cent stake. The timeline for the issue is yet to be decided in consultation with the finance ministry. According to Upadhyay, the company is looking forward to making its debut on the bourses. While no valuation has been made yet, he believes that the listing would be beneficial for TCIL.

Financially, the company is on a reasonably strong footing. Over the years, TCIL has been able to hold its own despite severe competition. Its turnover for 2008-09 stood at Rs 13,661 million, with a profit of Rs 1,725 million and a paid-up capital of Rs 432 million.

Meanwhile, the government has approved the disinvestment of TCIL's 30 per cent equity stake in Bharti Hexacom Limited (BHL). According to TCIL, this was done as TCIL had neither received any return on its investment in BHL nor had it effective say in BHL's operations. The Cabinet Committee on Economic Affairs has accorded in-principle approval to the stake sale on the condition that it should be done at the right time to obtain the best price.

TCIL has initiated the process of appointing advisers and valuers for the disinvestment process. The company is expected to float a global expression of interest inviting offers to buy the stake through a two-stage (technical and financial) bidding process.

On the other hand, TCIL is expected to increase its equity stake to 49 per cent in telecom solutions provider and optical fibre cable manufacturer Tamil Nadu Telecommunications Limited (TTL), which is co-promoted by TCIL. This is a part of the revival package planned for TTL and has been approved by the government. With the increase in equity, TCIL's equity capital in TTL is expected to go up from Rs 69.5 million to Rs 223.8 million.

The outside view
While TCIL is doing well in its areas of operation, there are concerns that alongside competitors like GTL and Nu Tek, the company's PSU image may prove to be its undoing. According to industry analysts, bureaucratic inertia, delays in decision-making and high manpower costs could hold TCIL back from executing its plans swiftly.

Upadhyay disagrees, though. He says that the company's credibility and record of timely completion of projects stands it in good stead with domestic and international customers. This would not have been possible if the company was plagued by multiple concerns. According to Upadhyay, the most pressing issue faced by the company is talent acquisition and retention.

With significant experience in executing turnkey telecom projects, TCIL is in a position to expand its footprint in India and abroad. Considering the healthy demand for telecom and ICT products, especially in emerging markets, it looks like TCIL is in for a good run.

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