India story intact, insists Nortel

Despite uncertainty after its bankruptcy protection filing in Canada and the US on January 14, telecommunications equipment maker Nortel Networks insists that its India story remains intact and thriving.

"We have not lost a single customer in Asia, despite the news," Francois Lancon, President Enterprise EMEA and Asia, told Business Standard. He admits, though, that "what works for us (stickiness of clients) also works for our competitors," adding, "The slowing economy is helping us retain clients, since customers don't like taking big decisions like changing vendors during times of uncertainty."

In India, Nortel has been doubling its revenues every two years, according to Lancon. Asia contributed 21 per cent to the Nortel Global revenues in 2008. "We increased our Asia share from 16 per cent to 21 per cent in 2008, as we took market share," says Lancon. Nortel does not give India numbers separately, but analysts estimate the company has a turnover of around Rs 1,200 crore (Rs 12 billion) in India and currently employs around 750 people.

"We continue to invest in India. We recently opened a Global VNOC (Virtual Network Operations Centre) in Bangalore, which will remotely support enterprise and carrier customers across Asia, Europe and the Americas. Currently, it supports 51 customers and can be scaled up as per the business needs. We have an NOC in Gurgaon as well," he added. Lancon insists "there will be no lay-offs in India." Instead, he says, the company is hiring in small numbers for the VNOC.

Nortel India's business broadly covers the telecom and government sectors, besides "substantial revenue" from segments like IT-ITeS, banking, financial services and insurance, and transportation (airports and railways). Lancon also says Nortel India is working very closely with its partners like HP, IBM, Wipro and TCS in India on large infrastructure projects.

The communications infrastructure market remains an attractive proposition in India, say analysts. "The enterprise market continues to gain traction, owing to fresh investments in enterprise contact centres The mobile telecom marketplace will again see significant upside, to the tune of $3 billion investments in infrastructure spends in the next year, owing to launch of 3G services," explains Alok Shende, principal analyst, Ascendia Consulting.

Nortel has benefitted from this trend. Recent Nortel wins in India include that of a leading private bank using its managed services solution, a railways company, an IT services company and an airport expansion deal. And an extension of the managed services agreement with Bharti Airtel, according to Lancon.

The company was also recently awarded a sizable order from the Chhattisgarh government for its state-wide area network project. Earlier this year, the company signed a $100 million (around Rs 5 billion) contract with BSNL for expansion of the GSM network. The contact centre solution contract with Bharti was also renewed.

Nortel also managed to get some traction in the unified communications space, where Cisco and Avaya are its major competitors (it's doing joint R&D with Microsoft in the UC space). The company is also bullish about its 4G offerings. Nortel has also actively pursued small and medium enterprises and expects this segment to contribute 25 per cent to its overall business in the coming years.