TCS Secures Rs 15,000 Crore Order from BSNL for BSNL 4G Site Installation

On May 22nd, Tata Consultancy Services (TCS) and its consortium announced that they have received a significant Advance Purchase Order (APO) worth over Rs 15,000 crore (approximately $1.8 billion) from Bharat Sanchar Nigam Limited (BSNL). This deal, led by TCS and involving various partners, will provide a much-needed boost to India’s largest software exporter, especially in light of the slowdown in its key markets, such as the United States and Europe.

TCS Secures Rs 15,000 Crore Order from BSNL for BSNL 4G Site Installation

According to official filings with the Bombay Stock Exchange (BSE), TCS will be responsible for the nationwide deployment of 4G networks for BSNL under this agreement. Tejas Networks, a telecommunications equipment manufacturer within the Tata Group, is part of the consortium and will handle the supply and servicing of the Radio Access Networks (RAN) equipment.

Apart from TCS, the APO has also been extended to the state-run ITI Ltd, which is expected to receive around 20 percent of the deal’s value, as estimated by analysts.

While this deal will undoubtedly boost TCS’s revenue, it may also have a margin-dilutive effect due to the involvement of other players. However, since no external third-party entities are part of the consortium, the overall impact on margins is expected to be relatively minimal. Pareekh Jain, Founder and CEO of EIIRTrend, explained that Tejas Networks will handle the manufacturing of equipment and hardware, and the billing for the other consortium partners will be directly addressed to them. Consequently, the margin dilution for TCS will be mitigated, although its standalone revenue may experience a decrease.

This deal represents the third major success for TCS in 2023. Prior to this, the company secured a $723 million contract from the UK-based Phoenix Group and another substantial deal with the British retailer Marks and Spencer (M&S), reportedly valued at $1 billion.

While the exact size of the BSNL deal remains undisclosed, discussions about it have been ongoing since September of the previous year. In July 2022, the Union Cabinet approved a revival package worth Rs 1.64 lakh crore for BSNL, encompassing both cash support and non-cash assistance. The package aimed to enhance the quality of BSNL services, alleviate financial stress, and expand fiber connectivity through a merger with Bharat Broadband Network Limited (BBNL). It is highly likely that the TCS-ITI deal is part of this comprehensive package. BSNL’s 4G services are expected to be rolled out across 100,000 towers or sites in the near future.

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