Delhi-based Capitel Wireless Ltd, the implementation partner of the $400 million Sweden-based Allgon System AB, has signed a letter of intent (LoI) with Tata Teleservices to provide telecom coverage engineering solutions (repeaters) over the next three years. The single-vendor deal for the supply of repeaters, which will be implemented on a turnkey basis as Tata Teleservices rolls out its CDMA/WLL-M platform across various circles, is indicated to be around $ 35 million "By next week, we will receive the first purchase order from Tata Teleservices for repeaters," Capitel Wireless president Arvind Kapur said.
"Increasingly, telecom service providers are strategically using repeaters to enhance the geographical coverage of their networks which have BTS (Base Trans-receiver System). repeaters can bring about savings of as high as 90 per cent in operating costs and between 20 per cent and 30 per cent in infrastructure cost (Capex). By using repeaters, a company can reduce the number of BTS by 10 per cent," Allgon Systems AB sales manager Patrik Moberg said.
While a repeater is not an alternative to BTS, it reduces the need for more BTS units. Repeaters enhance the coverage of a network across targeted zones: from micro-focused sites (inside buildings, mines, highways, rural and sparsely populated locations) to macro-locations (entire towns).
BTS accounts for around two-third of most capex investments in the wireless infrastructure. BTS vendors include Motorola, Ericsson and Lucent. Most cellular service providers in the country, except public sector giants MTNL and BSNL, are adopting the coverage-enhancing solution.
Even Reliance Infocomm Ltd is indicated to be going big on repeaters. Currently, several global majors are in the race for an estimated $40-45 million repeater deal from Reliance. Capitel, in conjunction with Allgon, is test-running a project at Reliance Knowledge City in Navi Mumbai.
Capitel expects the repeater market to grow from Rs 150 crore a year now to $200 million (Rs 1,000 crore) over the next three years.
The eight-month old Capitel which forged a technical alliance with Allgon last month, is said to have invested Rs 30 crore in the company and expects to double the investment by the year-end. It also plans to double the current implementation workforce (coverage engineers) to 120 in the next six months. Current investments are in the areas of infrastructure (eight technical support centres) and inventory for products like microwave radios, BTS antennas and repeaters.
So far, the funds have come from group accruals - parent Trexim Corp is engaged in the distribution of optical cable fibres as well as operating a finance company. For future expansion, the company proposes to go for a mix of debt, IPO, strategic equity participation and even a joint venture partnership with technical partner Allgon.
Capitel expects to break even in 2003 - its first year of operation. It is targeting revenues of Rs 40 crore this calender year (so far Rs 15 crore) and a revenue growth of 150 per cent in 2004.
Allgon's global clients include Orange, China Unicon, China Telecom, and Telia. The company has strong presence in the EU and South America and has recently started looking at emerging markets like Korea and China.