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04-17-2012, 08:57 AM #1
BSNL ties up with NTT Group to roll out data centre services
Dimension Data, the $5.8-billion information technology firm acquired by Japan's NTT Group two years back, has tied up with state-owned telecom operator Bharat Sanchar Nigam Limited, or BSNL, to offer data centre services . The joint business, which is in the nature of a revenue-share model, would host services such as video-as-a-service for enterprises and offer other cloud services such as infrastructure on demand.
According to Kiran Bhagwanani, CEO of Dimension Data, BSNL is the perfect fit as it has the largest last mile penetration through its fibre reach. BSNL also has huge infrastructure assets in the form of land and offices across the country and a clientele of 500 enterprises. Dimension Data has over 400 clients which it wants to leverage for the new business.
Dimension Data and BSNL are late entrants into the business as competitors such as Airtel, Tulip Telecom and Sify have been offering data centre services and managed solutions for more than five years now.
However, Bhagwanani is optimistic. "The current data centre market in Rs 2,400 crore and is expected to grow at a 21 per cent CAGR (compound annual growth rate)." He expects to generate revenue of Rs 100 crore in the first year and eventually Rs 300 crore annually.
Globally, NTT is one of the largest data centre operators, and is planning to use its global knowledge to do business in India. It has a saleable space of 63,500 square-feet, but Bhagwanani does not want to get into selling space like most other data centre operators. "We are not selling space. It is a price war business. We will sell services," he says.
NTT has also entered the data centre business in other countries - with Hutchison in Hong Kong, PLDT in Philippines and Indosat in Indonesia.
For BSNL, an ailing company, the tie-up might mean revival. For every Rs 100 crore of data centre business, it can get additional business of Rs 200 crore by deploying fixed line and broadband.
NTT has already made investments of Rs 120 crore of the committed Rs 200 crore. It has gone live with six data centres, and has already signed three clients. It has already got proposals of Rs 100 crore. In two years it plans to become EBITDA positive and the following year cash flow positive.
A wise move for BSNL, only if the partners can keep the order book running.