Private networks to unleash revenues for IT majors

With the concept of private networks becoming a reality following the auction of 5G spectrum, the country’s leading information technology companies like TCS, Infosys, Wipro and HCL Tech see a huge opportunity in this field, as an entirely new revenue stream is on offer for them.

Simply put, what telecom network providers like Ericsson and Nokia currently do for service providers like Bharti Airtel or Vodafone Idea, these IT firms will now be able to do for enterprises across segments like automobiles, FMCG, healthcare chains and others.

“With 5G in manufacturing, the industry 4.0 principles can actually become a reality, yes you would need the applications, yes you would need the private network, so that you could connect internally as well as connect meaningfully with the ecosystem that you are building, so we are looking at all those opportunities,” N Ganapathy Subramaniam, chief operating officer of TCS said at the post-earnings briefing of the company on Monday.

Industry analysts said that since IT firms are primarily system integrators, they cannot be assigned spectrum for building retail captive networks, but enterprises in other segments, after acquiring spectrum in the millimetre band, can award contracts to them to build such networks for them.

For the time being, enterprises will not be assigned spectrum directly from the government but will have to lease it from the telecom service providers. However, they are free to subsequently award contracts to IT firms.

Under private networks, corporates can set up their own Wi-Fi, data network instead of taking the services from a telecom service provider as is the norm today. Such networks would help healthcare chains to connect their different centres with high-speed data through which they can conduct remote surgeries and similar functions which require low latency. Similarly, an automobile manufacturer can connect their centres across the country and move to a fully, much faster digital operations.

After bagging such contracts from enterprises, the IT firms concerned will manage them for the specified period and generally such contracts are renewed at specified intervals.

“A lot of applications for 5G are around the world of digital manufacturing, the ability to leverage data speeds and volume of data into manufacturing world,” Thierry Delaporte, chief executive officer of Wipro said on Wednesday. “We are investing in these areas, we are looking at potential acquisitions as we go…it (5G) is one of our hot markets at the moment,” he added.

“We see a huge amount of traction in this (5G) business as we look forward, so it’s one of the growth drivers,” Salil Parekh, chief executive officer of Infosys said at the company’s post-earnings conference on Thursday.

“We are definitely doing very well in telecom with close to 27% year-on-year growth…we also have some unique products which we have modernised and upgraded, all of them will play in the sector, so we continue to remain bullish on the sector,” C Vijayakumar, chief executive officer and managing director of HCL Tech said on Wednesday.

The concept of private network is emerging as one of the most promising use cases of 5G globally. A white paper by Qualcomm has pointed out that such networks guarantee coverage in remote locations where commercial network coverage is limited. Second, they lead to more network control, like applying configurations that are not supported in a public network and enterprises can retain sensitive operational data at premises. Third, private 5G networks are able to meet better performance profile. Financial Express