SUBEX REDUCES DEPENDENCY ON BRITISH TELECOM

Bibhu Ranjan Mishra, Bangalore
Business Standard

Telecom software product firm Subex is gradually reducing its dependency on its biggest client British Telecom, which contributes more than 20 percent to the company’s top line.

Even as the business it is deriving from BT is increasing in absolute terms, the revenue contribution to Subex’s annual revenue in 2008-09 might fall to 18-20 percent this year from 21-22 percent a year ago, Subex said. This is mainly due to faster growth of its other top-10 clients including AT&T, Telstra, Telecom Italia and Swisscom.

Subex Founder Chairman and Managing Director Subash Menon said, “This year, we will get about 18-20 percent revenue from BT in line with our guidance. Last year, it was a little higher.

Since the other portion (non-BT business) is also growing faster, the revenue share from BT is decreasing. In absolute terms, the revenue we will get from BT will be higher than the previous financial year.”

Unlike most companies in the IT services sector, Subex is over-dependent on its top-10 clients. The top-10 clients contribute close to 85 percent of its revenue. However, since most of the contracts in the telecom space are multi-year deals, the risk of depending too much on specific clients is mitigated to a certain extent.

BT, which is also an indirect investor in Subex through Norwest Venture Partners (NVP), provides a business of $20-23 million on an annualised basis. The business from BT is growing at 10-15 percent every year.

Almost three years ago, when BT announced 21st Century Networks (21CN), a network upgradation project transform its legacy network with advanced network capability, Subex was also awarded with a small portion of the project. The project with an outlay of $10 billion, spans over five years and involves multiple vendors.