What does 5G rollout implementation partnership with Airtel mean for TCS?

What is in it for TCS?

This partnership is important for TCS, for whom it is a key focus area, as emphasized by its Chairman N Chandrasekaran during the recent annual general meeting (AGM).

During the TCS AGM on June 10, Chandrasekaran, chairman, Tata Group said, “5G is new technology and TCS will play a significant role both in the development of firmware, which is required to develop the necessary technology (for 5G solutions). But most importantly, leveraging the 5G and create large number of applications in various sectors. This is an important growth area for TCS.”

The partnership is clearly in line with this vision, where TCS can strengthen its capabilities and eventually scale its solutions and gain market share when 5G deployment gains pace in India and globally.

Ray Wang, Principal Analyst & Founder, Constellation Research, a research and  advisory firm, said that TCS’ O-RAN based solution is a key capability in their telecom stack that will give Airtel a competitive advantage and drive down the cost of 5G deployment in India.

“(With this partnership) TCS also gains the capability to help other telcos with both the technology and implementation and Airtel will save a lot of time and money in the rollout,” Wang added.

A Bengaluru-based analyst explained that 5G implementation has more software component than 4G and hence there is more need for technology service providers. Without partnerships with IT firms, telcos will run into integration challenges, making this partnership important, given the huge opportunity 5G provides.

5G implementation market

An analysis by UBS pegs that 5G rollout is a $30 billion opportunity for Indian IT firms. The market is clearly huge and it is not lost on the IT service providers.

For instance Tech Mahindra has partnered with Japanese telecom major Rakuten for 5G implementation. According to several media reports, Tech Mahindra wants to partner with the telecom major Jio for 5G implementation. Reliance-owned Jio, which is one of the key players in the 5G space, is expected to launch 5G smartphone in partnership with Google this week, according to reports.

Globally too, such partnerships are common place and will likely continue. For instance, Vodafone has partnered with Capgemini for 5G implementation.

But…

Though the opportunity is huge, benefits from these partnerships are unlikely to be significant, point out some.

Peter Bendor-Samuel, CEO, Everest Group, said, “These partnership rarely mean very much and are mostly a signaling vehicle to show that the parties are committed to 5G. That is not to say that TCS will not capture some revenue from this but in the end Airtel will work with other vendors and TCS will work with other 5G networks. So the partnership is good publicity but is unlikely to contribute significantly to either party’s market success.”

Telcos like Airtel, Jio and Vodafone work with major IT service providers, and other players will get a part of the pie too.

In terms of revenues too, it might not amount to a significant value, at least not in the beginning. “This is a new technology and there is a lot of uncertainty between pilot to implementation. So this would be a step by step process,” explained Pareekh Jain, founder, Pareekh Consulting.

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