NEW YORK—Tata Communications may not be a household name in the United States, although it’s well known globally. But after a successful run of double-digit growth under the helm of CEO Amur S. Lakshminarayanan, the Indian IT and service provider now sees a golden opportunity to boost its integrated package of communications, cloud, and IT services for the North American market.
It’s good timing. Many of the large North American incumbents, especially U.S. carriers AT&T and Verizon, have been in a growth slump and have seen confidence among their enterprise customers erode after unsuccessful forays into businesses such as digital media (Verizon) and satellite TV (AT&T). The truth is, the American incumbents have been distracted, and enterprise business connectivity has not been a priority.
At the same time, business customers are overwhelmed with the complexity of integrating communications infrastructure with cloud services.
“In the space we’re operating, we have a huge opportunity,” said Lakshminarayanan, who goes by his popular name Lakshmi, at an interview here this week at the Tata Communications Analyst Day hosted by NetEvents. “Our value is very differentiated from the incumbent telcos. We’re focused on getting across the message that we are a global company.”
Amur S Lakshminarayanan details U.S. growth plans at an analyst event in New York
Double-digit Growth and Record Share Price
Lakshmi says that with a global network, deep cloud relationships, a portfolio of IT services, and a tight relationship with its sister company, Tata Consultancy Services (TCS, where he previously served as CEO of TCS Japan), Tata Communications is in a position to help global companies make sense of the growing complexity of hybrid environments (enterprise, datacenter, cloud). The company calles this their Digital Fabric strategy.
Lakshmi took over as CEO and Managing Director of Tata Communications (Tata Comm) in 2019, and since then he has guided the company toward double-digit growth by focusing on enterprise data services, global connectivity, and cloud architectures.
In posting results for the fourth-quarter fiscal year 2024 in April, Tata Comm reported 18% year-over-year (y/y) revenue growth, with 22% growth in data services. The company is projected to keep growing in the double digits for the remainder of the year and its shares, which trade on both the Bombay Stock Exchange and the National Stock Exchange in India, recently hit an all-time high. The company says its growth has been powered by the acquisition of enterprise services companies, including Oasis Smart SIM Europe (eSIMs), The Switch (live content streaming), and Kaleyra (platform-as-a-service).
Meanwhile, the large U.S. incumbent service providers are struggling. AT&T recently reported 2.2% y/y growth, and Verizon’s recently reported y/y revenue growth was flat. While both North American companies still have strong cash flows, their large investments in 5G haven’t lived up to the hype and promise.
Global Networks and Cloud Connectivity
One of the competitive differentiators for Tata Comm is the scale of its network. Operating in 190+ countries around the world, the company is estimated to carry 30% of the world’s Internet routes, and it directly connects to 80% of the world’s cloud operators. By consolidating services on its network, Tata believes it can provide customers with better service and performance because of its breadth.
The company is also growing in visibility. Tata Comm’s logo can be seen on Formula 1 race tracks. Its high-profile partnership with Formula 1 facilitates global connectivity to the races, including the transfer of video feeds and audio channels between the venues and F1’s media and technology centers. Latency is kept under 200 milliseconds.
With this credibility, Tata Comm is launching a big push in the United States, where Lakshmi thinks it should very quickly grow to $1 billion in revenue. Tata Comm execs believe that Tata Comm’s deep technical heritage and understanding of complex technology architectures will give it an edge in the business technology markets.
Tata Comm recently hired former IBM sales executive Dino Trevisani as Senior VP of the Americas to drive the effort in the Americas. Trevisani told the analyst audience here in New York that he plans to carry Tata Comm’s global brand and visibility in projects such as Formula 1 to the United States.
“We’re going to enable these U.S. corporations to operate with telecommunications more effectively globally, which will then prove we can help them locally. And I think with some of the assets we've added to our portfolio, we're adding more and more value.”
In addition to its relationship with TCS, Tata Comm also has strategic partnerships with the largest cloud providers in the world (AWS, Azure, Google, and Oracle Cloud), equipment providers (Cisco, HPE, and Versa Networks), and even AI giant Nvidia. It plays on a global scale, with networking infrastructure everywhere in the world.
The vision is to use this expertise to help customers integrate complex technology platforms with a unified networking and digital infrastructure.
Racing Forward with Formula 1
Lakshmi believes Tata Comm has several advantages, which include a global network as well as the skills to help customers with architectural decisions, such as positioning for multicloud and hybrid cloud environments.
Recently, it’s proven these capabilities with broad deals with customers from some of the largest companies in the world. Tata presented many examples of successful customer deployments. Here are a few:
- For Formula 1 racing, Tata Comm connects a network for 24 races per year. With all of its motorsports customers, including F1 , Formula E and Moto GP, it connects 62 races per year, providing connectivity for 33 teams and delivering a low-error viewing environment for 1.5 billion fans in 200+ countries.
- At Jaguar Land Rover (JLR), Tata helped this automotive company connect more than 900,000 vehicles, providing global connectivity in 80+ countries, as well as installing 2 million SIMs for new services such as data telemetry and infotainment.
- At shipping company Maersk, Tata helped reduce operating costs by 50% by accelerating the pace at which users and applications could be connected.
- Tata helped Singapore Airlines connect nine contact centers across seven countries, delivering a better experience for customers. Singapore now claims 99.95% availability for its contact centers. It also provides global mobile connectivity for pilots, cabin crew, and staff in 37 countries.
When I asked Lakshmi for a common theme in customer projects, he said it was Tata Comm’s capability to take complexity out of the equation for customers by integrating technology, networking, and cloud services.
“One of the key words we are going to use is ‘uncomplicate’ – it’s become too complicated for customers. Complications lead to lack of agility and increased costs. With what we have to offer we think we can uncomplicate things and provide better services and future-proof the architecture.”
So far, the Tata Comm story is a refreshing one in the global communications market, which is rife with business challenges and growth plans that haven’t panned out. It will be exciting to see if Tata Comm can inject new energy into the stagnant U.S. market for enterprise communications services.
