The onset of the global pandemic in early 2020 put the spotlight on the telecom equipment sector like never before. The year made it unequivocally clear that a robust telecommunication infrastructure is an essential service for delivering connectivity to people, homes, offices, and governments, and to keep our lives going in as normal a way as possible. While it was always known that digitization and a highly-connected world were the way forward, COVID-19 fast-forwarded this transformation, and increased the demand for reliable, high-bandwidth services. It triggered a sure but sudden push toward digitization, and led to an increased spending on network capacities by operators to meet the growing demand of bandwidth-hungry applications. On the whole, the growing adoption of work-from-home, learn-from-home, e-commerce, and high-bandwidth video applications will continue to drive the demand for data traffic on telecom networks. And it will, as a result, continue to provide the much-needed strong tailwinds to the telecom equipment sector, both in India as well as globally.
High-bandwidth services to drive demand
To deliver these high-bandwidth services, telecom and internet service providers need to make capital investments in optical transmission and fiber broadband access equipment. With increased fiberization, both to homes (for home broadband) as well as to cell towers (for 4G and 5G backhaul), telecom service providers will be required to increase their capital investments in upgrading the capacity and reach of their access as well as backbone networks.
Government’s policy push to spur domestic demand
We are enthused by the Hon’ble Prime Minister of India’s call to build an Atmanirbhar Bharat (self-reliant India) in critical areas of technologies, such as telecom, which has long-term security as well as economic significance. We see a strong intent from the government to promote products developed with Indian R&D and IPR, and which are manufactured in India. We believe that supportive government policies, such as the product-linked incentive (PLI) scheme, the mandate for all telecom service providers (both government and private) to source only trusted telecom equipment, and further strengthening of Preference to Make in India (PMI) policy, clearly signals that the government wants to make India a global telecom equipment-manufacturing hub, especially in the light of the new geopolitical situation.
End-to-end product portfolio
At Tejas, we have an end-to-end portfolio of optical products, from the core of the network to the access. Our TJ1600 family of carrier-class products for high-capacity metro and long-distance networks is based on cutting-edge DWDM (dense wavelength division multiplexing) and OTN (optical transport network) technologies with multi-terabit transport and switching of data, voice and video traffic. Our TJ1400 ultra-converged broadband platform is an innovative 5G-ready product that combines high-speed fiber broadband (GPON/10G-PON), mobile and fixed wireless broadband (4G/LTE), and active Ethernet technologies with diverse optical transport options (PTN, OTN, CE2.0, IP/MPLS). In addition, we have a rich set of packet transport network (PTN) products and Ethernet switches for critical infrastructure buildouts.
Global demand promising
Globally too, the impact of COVID has accelerated the adoption of high-speed fiber-based home broadband connections and increase in network backbone capacities. This in addition to the various geopolitical developments and security concerns are forcing telecom service providers to diversify their vendor base.
2022 and beyond
The coming years have the potential to catapult India into a serious contender in the telecom equipment space. Not only is there an expected uptick in demand for connectivity and bandwidth in India (3–5x increase in data traffic by 2025 as per various industry estimates), we foresee a heightened demand for digital transformation by enterprises and for reliable, safe, and secure transmission of data, voice, and video by critical infrastructure companies in the next few years. Continued fiber investments by private telcos, coupled with the promise of 5G and the associated investments in the run up to its adoption, are also potential game changers for the Indian telecom equipment landscape.
The continued policy push from the Government of India, and the ongoing rural broadband and connectivity initiatives, would be the much-needed shot in the arm for the sector.
While the global chip shortage remains a near-term risk, the growth prospects and fundamentals appear quite promising.