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Rukmini Priyadarshini

Subex Systems is keen on the telecom products space. It spells out its reasons.

MOVING from telecom services play to the telecom products business, Subex Systems signalled its confidence in the latter by hiving off its services business into a subsidiary.

The company is looking to drive future growth from its products business, says Subash Menon, President and CEO. Excerpts from a chat with eWorld:

Last year, Subex Systems acquired Fraud Centurion from Lightbridge, US, in August 2004, and Fraud Management activity of Alcatel, UK, in July 2004, for about $6.5-7 million mainly to tap into their customer base and as an entry point into the American and European markets.

"Although we have offered to support the products of the acquired companies, customers are transitioning to our products in phases," says Menon.

Telecom operators across the world either lose money to fraudsters, or simply because their processes do not reflect their business.

Subex offers telecom fraud management systems with an automated workflow framework that enables companies to prevent or manage fraud within their systems as also to prevent revenue losses in daily system management, he says.

Subex' RevMax{trade}, its revenue maximisation suite, includes fraud management through `Ranger' and `Incharge,' a revenue assurance solution.

Ranger has the largest installed base worldwide for fraud management systems, Menon says.

Subex is beginning to see action with respect to customers in new geographies and existing customers as well as in offering new products to them, says Menon.

The average contract revenue will grow, and "in the non-linear growth path for products, we are now expecting a surge," he says. The company expects to increase profitability by keeping costs stable, while earning higher revenues. "In addition, we are able to attract larger contracts, because of the large customers and products we now have," he says.

Subex expects to cater to contracts involving telecom subscriber bases of 10-12 million, up from the 3-4 million it has been handling so far.

"We even have one customer with 15 million subscribers and going forward, we are able to participate in RFPs (request for proposals) of 45-50 million subscribers, signalling that the market has accepted us,'' says Menon.

"We plan to focus on our product business in the future — about 90 per cent of our profits comes from products," he says. Last year, Subex Systems earned 55 per cent of its Rs 89-crore revenues from services, but products are most profitable and grew by 60 per cent.

The potential sales pipeline for the company is $30 million over the next year. The market for Subex's products is about $200 million and growing at a compounded annual growth rate (CAGR) of 12 per cent over the next four-five years, says Menon.

Subex is finding that developing markets are more active and receptive to its fraud management products while telecom companies in the more developed Western markets are more in need of its revenue assurance product.

Both sets of products contribute equally to its earnings and the company would offer customers a whole suite of products that, with its modularity, will let customers scale better, says Menon.

Subex' clientele includes AmericaTel, Sprint, Intelig, Porta, ETB, Western Wireless, Telus Mobility, US Cellular and Cincinnati Bell Wireless, Sonatel Mobiles, Ikatel, Orange Cameroon, Econet Wireless, Tiscali, Vodafone, Bharti Mobiles, BPL Mobile, Hutch, Idea Cellular, Tata Teleservices, Indosat, Starhub, DTAC Thailand, JTB Brunei and MTN Sri Lanka in the Asia-Pacific.

priya@thehindu.co.in

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