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Mr Subash Menon, CEO, Subex Systems

Shamik Paul Vishwanath Kulkarni

Bangalore, Dec. 10 Despite the troubled telecom sector casting a spell of gloom on Indian IT services’ vendors, software product maker Subex Ltd is optimistic about its long-term growth prospects.

The company, which slipped into the red due to the integration-related issues of Canadian firm Syndesis that was acquired last year, expects to bounce back into the black by the end of the year.

Subex said it was largely unaffected by the developments in the global telecom sector, where equipment vendors such as Alcatel Lucent and Ericsson are facing tough times as their customers, the service providers, turn cautious with their capital expenditure plans. Business Line spoke to Mr Subash Menon, CEO, Subex, on the impact of the slowdown. Excerpts:

What has been the impact of changing market conditions on Subex?

Thing are okay, given the macro economic conditions. It doesn’t seem to have impacted the telecom sector too much. We have not seen a drop in orders. So, hopefully, when we declare results at the end of the third quarter, we will give a decent number with regards to order booking.

The number of subscribers for telecom service providers is coming down in certain geographies such as North America. How do you see that impacting Subex?

Subscription base coming down? Not quite. If you go through what Telecom Italia and Vodafone or others have been saying, they are still profitable. BT, despite all the problems, have had it still profitable. Where do these operators stand now when it comes to deploying applications like the one that Subex builds?

We have two sections, the Revenue Maximization Solutions and the Fulfilment and Assurance Solutions. RMS solutions are primarily to find out the holes that they may have, and also to take care of their day-to-day operations.

This is very important for them at this point in time because they need to plug all holes to increase efficiency.

The RMS business will grow about 20 to 25 per cent, whereas the FAS side would grow only about 10 to 12 per cent. The company as a whole will grow between 15 and 20 per cent because RMS is 65 to 70 per cent of the company. So in a recessionary environment, where the world is talking about de-growth, if you grow at 15-20 per cent, it’s good.

Your largest customer BT is on a cost rationalisation exercise. Will there be any impact?

BT has renewed our contract a few months agofor three years. This contract is on the RMS side. We are extremely well embedded in BT and are part of their operations.

We expect to provide additional services such as revenue assurance that got added to the contract. As of now it is a $50 million contract over three years. We do have a small business with BT on the FAS side, but that’s separate.

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