Tata Consultancy Services (TCS) Share Price: A consortium led by Tata Consultancy Services (TCS) has won an advance purchase order from state-owned BSNL (Bharat Sanchar Nigam Ltd) for the deployment of a 4G network across India. In an exchange filing, the Tata Group company said that the advance purchase order from BSNL is valued at over Rs 15,000 crore.
The consortium includes Tata Group’s telecom gear making company Tejas Networks, which will be responsible for supplying and servicing the Radio Access Networks (RAN) equipment.
Along with TCS, the APO was also issued to state-run ITI Ltd for this project. According to analysts, about 20 per cent of the deal value will go to ITI.
While the deal is revenue boosting for TCS, it could also be margin dilutive with other players being involved. But according to Pareekh Jain, Founder and CEO, EIIRTrend, with Tejas Networks taking over manufacturing of the equipment and hardware needed, margin dilution would be less overall as no other third party player is getting involved outside the consortium.
“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 its standalone revenue could come down,” he added.
Shares of TCS gained 0.8 per cent in the intra-day trade on Monday, while those of Tejas Networks and ITI zoomed 4.2 per cent each. By comparison, the benchmark S&P BSE Sensex and the BSE Information Technology indices were up 0.23 per cent and 0.78 per cent, respectively, at 10:05 AM.
This will be the IT services behemoth’s third major deal in 2023, following a $723-million deal from UK-based Phoenix Group and another one with British retailer Marks and Spencer (M&S). Though the exact deal size was not disclosed, according to reports, the M&S deal was worth $1 billion.
In July 2022, the Union Cabinet had approved a Rs 1.64 lakh crore revival package for BSNL, which included cash support of Rs 43,964 crore and non-cash support of Rs 1.20 lakh crore.
The package had three main elements – improving the quality of BSNL services, de-stressing the balance sheet, and expanding the fibre reach through merger with Bharat Broadband Network Limited (BBNL).
This TCS-ITI deal is likely to be a part of the same package. BSNL’s 4G services are expected to be rolled out across 100,000 towers or sites.
This deal was in talks since September last year.
In December 2022, government had said that state-run BSNL is working on the its 4G saturation program where every village, which does ot have a high speed broadband connection, will be provided with one within a year or so.
“BSNL has already awarded a lot of contracts for passive infrastructure, while it’s in the process of finalising the contracts for active infrastructure,” then then-telecom secretary K Rajaraman had said.
Over 24,600 uncovered villages were expected to be covered under the programme, many of which are in remote, rural, and far-flung areas.
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