On May 22, a consortium led by Tata Consultancy Services (TCS) confirmed that it has received an Advance Purchase Order (APO) valued at over Rs 15,000 crore (around $1.8 billion) from Bharat Sanchar Nigam Limited (BSNL).
TCS Bags Rs 15,000-crore BSNL Deal
This deal from government-owned telco will prove to be a shot in the arm for India’s largest software exporter during a time when its major markets such as US and Europe are slowing down.
TCS will be undertaking deployment of 4G networks across India for BSNL under this deal as the company announced in regulatory filings on BSE.
The consortium consists of the Tata Group’s telecom gear making company, Tejas Networks and it will be responsible for supplying and servicing the Radio Access Networks (RAN) equipment.
Besides TCS, the APO was also issued to state-run ITI Ltd for this project with around 20 percent of the deal value going to ITI, according to analysts.
Revenue Roosting Or Margin Dilutive
It can not be denied that this deal will be revenue boosting for TCS.
But, it could also be margin dilutive with other players being involved.
The margin dilution would be less overall as no other third party player is getting involved outside the consortium, said Pareekh Jain, Founder and CEO, EIIRTrend, with Tejas Networks taking over manufacturing of the equipment and hardware needed.
Further added, “The TCS-led consortium includes Tejas Networks and C-DOT. The billing for the other two consortium partners will be done directly to them in this deal. So, it won’t be that margin dilutive for TCS, but it’s standalone revenue could come down,”.
Third Major Win For TCS
This deal marks the initiation of the third major deal by this IT services behemoth in 2023
Before this it has signed a $723-million deal from UK-based Phoenix Group and another one with British retailer Marks and Spencer (M&S).
So far, the exact deal size is not disclosed, reportedly, the M&S deal was worth $1 billion.
For the unaware, this deal was in talks since September last year.
The Union Cabinet had approved a Rs 1.64 lakh crore revival package for BSNL In July 2022.
It included a cash support of Rs 43,964 crore and non-cash support of Rs 1.20 lakh crore.
Moving ahead, this package had three main elements including, improving the quality of BSNL services, de-stressing the balance sheet, and expanding the fiber reach through merger with Bharat Broadband Network Limited (BBNL).
Most probably, this TCS-ITI deal will be a part of the same package.
Soon, BSNL’s 4G services are expected to roll out the 100,000 towers or sites across.
