TCOM expects to earn $800 m from emerging markets

MUMBAI: Tata Communications (TCOM), the global telecommunications arm of the Tata Group, is eyeing 20% of its revenues, or around $800 million, from non-Indian emerging markets in the next three years.

TCOM���s target markets are South East Asia, the Middle East and Africa excluding India and China. The company���s focus on these markets is in tune with current economic scenario.

While most of the developed world, including the US and UK, is expected to report negative GDP growth in near term, major emerging economies are still expected to grow, though at a much reduced rate.

���There is a big emphasis on emerging markets in TCOM. Our ambition is that non-Indian emerging markets should account for 20% of our revenues in three years. We have expectations for a steady growth on a year-on-year basis,��� TCOM president (global data and mobility solutions) Vinod Kumar told ET.

While he refused to quantify revenues, a back-of-the envelop calculation suggests that the company is likely to earn $800 million from non-Indian emerging markets by FY12.

TCOM MD Srinath had already said the company was looking at five-year compounded annual growth rate (CAGR) of 15% for revenues, which stood at $2 billion in FY07. This implies the company���s revenues would be around $4 billion by FY12 and 20% of it would be $800 million in that year.

The company���s total income for the December, FY08 quarter was up 11% year-on-year to Rs 1023 crore (around $200 million), backed by growth in wholesale voice as well as enterprise and carrier data businesses.

Mr Kumar said as the economic order changes, there will be more and more companies which want to enter emerging markets.

���Our emerging markets strategy is a delivery strategy. Our objective is to serve the needs of global MNCs and Indian companies going global rapidly and entering emerging markets for growth. We look at their pain spots and provide them cost-effective and reliable solutions,��� he said.

TCOM, which was earlier public sector monopoly and called Videsh Sanchar Nigam (VSNL), has now grown from being only a long distance voice player to a provider of voice, data as well as video services.

TCOM also offers managed services and managed IT infrastructure and is present in 40 countries.

���We have built relationships, cables and markets in SE Asia, the Middle East and Africa. We will leverage these,��� said Mr Kumar.

Further, TCOM is the only player offering these multiple services in the sub-Saharan Africa, which will help it in getting business from companies entering the region.

The company has also increased stake in its South African telecom venture, called Neotel, to 56% from 26%. It is expected to use Neotel as the growth vehicle in the region.