The speculation that has been there in the market from months has come to an end after the announcement of the deal that Tata Consultancy Services (TCS) was tipped to be the front runner for the contract. Reportedly, the talks on the deal were going on for months. And now, TCS has announced in a statement said that it has received an Advance Purchase Order (APO) valued over Rs 15,000 crore from BSNL. Notably, TCS is the country’s largest software exporter and typically books over 5 precent of its total revenue domestically.
On the other hand, data services across the country barring Mumbai and New Delhi are been given by Bharat Sanchar Nigam Limited (BSNL) provides fixed line and wireless telephony.
Notably, the private competitors of BSNL have already launched its 5G services in select pockets of the country.
Tejas Networks, a manufacturer of telecom equipment for the Tata Group, is a member of the consortium and will be in charge of providing and maintaining the Radio Access Networks (RAN) hardware.
The state-run ITI Ltd was also given the APO for this project in addition to TCS. ITI will receive around 20 percent of the deal’s worth, according to experts. Despite the acquisition increasing TCS’s income, other firms’ participation raises the possibility of margin erosion.
Tejas Networks producing the necessary hardware and equipment would result in reduced total margin erosion because no other outside parties are participating, said Pareekh Jain, founder and CEO of EIIRTrend.
This will be the third significant transaction for the IT services giant in 2023, following a USD 723-million deal from UK-based Phoenix Group and another one with British retailer Marks and Spencer (M&S)
The sources claim that the negotiations for the sale began in September of last year. In July 2022, the Union Cabinet agreed a Rs 1.64 lakh crore revival package for BSNL, which includes Rs 43,964 crore in cash support and Rs 1.20 lakh billion in non-financial support.
The three key components of the package were, enhancing the calibre of BSNL services, relieving financial pressure, and extending the reach of fibre optics through the merger with Bharat Broadband Network Limited (BBNL).
This TCS-ITI agreement will probably be included in the same bundle. 100,000 towers or locations are anticipated to get BSNL’s 4G services.
Notably, Tata Consultancy Services has always seen Indian government projects as a training ground to learn from the complexity and replicate this in the way they architect projects for various countries. reportedly, the focus of the company were never alone the profit margins.
Union minister Ashwini Vaishnaw said, “@BSNLCorporate is deploying indigenous 4G/5G stack , making operating profit and is coming out as stable player, which is a turnaround story.”
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