TCS-led Consortium Secure $1.8 Billion BSNL Deal for 4G Network Deployment in India
How many major deals have TCS secured in 2023, including the BSNL contract?
22 May 2023
TCS and its consortium partners have secured a $1.8 billion order from BSNL for the deployment of a 4G network across India.
The consortium includes Tejas Networks and state-run ITI Ltd, with TCS leading the project and Tejas Networks responsible for supplying the RAN equipment.
While the deal is expected to boost TCS's revenue, it may have a margin-dilutive effect due to the involvement of other players.
In a significant development for India's largest software exporter, Tata Consultancy Services (TCS) and its consortium partners have received an Advance Purchase Order (APO) worth over Rs 15,000 crore (approximately $1.8 billion) from Bharat Sanchar Nigam Limited (BSNL). The consortium, which includes Tejas Networks and state-run ITI Ltd, will undertake the deployment of a 4G network across India for BSNL. This deal comes at a crucial time for TCS, as its major markets in the US and Europe are experiencing a slowdown. While the deal is expected to boost TCS's revenue, it may also have a margin-dilutive effect due to the involvement of other players.
TCS will lead the consortium and oversee the deployment of the 4G network. Tejas Networks, a telecom gear manufacturing company within the Tata Group, will be responsible for supplying and servicing the Radio Access Networks (RAN) equipment. The APO also extends to state-run ITI Ltd, with approximately 20 percent of the deal value expected to go to them. Although TCS's margins from the deal are predicted to be less than 10 percent due to anticipated pass-through costs, Tejas Networks stands to benefit significantly from this meaningful win.
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TCS has a unique approach to government projects, focusing on learning from their complexity and using them as a training ground to enhance their expertise. The company has achieved remarkable success in running public-facing government service portals, including India's passport project, the Indian Railways' IRCTC site, and India Post's digital project. TCS views Indian government projects as an opportunity to understand and replicate large-scale architectures for various countries, prioritizing scale over profit margins.
The TCS-led consortium's deployment of the 4G network for BSNL is part of a broader revival package approved by the Union Cabinet in July 2022. The package, valued at Rs 1.64 lakh crore, aims to improve the quality of BSNL services, de-stress the balance sheet, and expand the fiber reach through a merger with Bharat Broadband Network Limited (BBNL). With the rollout of 4G services across 100,000 towers or sites, BSNL aims to revive its operations and enhance its competitiveness in the telecommunications market.
The BSNL order marks TCS's third major deal in 2023, following agreements with UK-based Phoenix Group and British retailer Marks and Spencer. While the exact deal size for the Marks and Spencer contract remains undisclosed, reports suggest it was worth $1 billion. In the fiscal year 2023, TCS reported the highest revenue contribution from India among its peers, accounting for 5 percent of its total revenue. Comparatively, Infosys earned 3.2 percent, and Wipro reported 4 percent of its revenue from India, emphasizing the significance of the domestic market for TCS.