Tejas Networks Limited (TEJASNET) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Tejas Networks Ltd. Q1 FY27 Earnings Conference Call hosted by ICICI Securities Ltd. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference has been recorded. I now hand the conference over to Mr. Mohit from ICICI Securities Limited. Thank you and over to you soon.

Thank you, Anushka. Good morning, everyone. Thank you for joining on the Q1 FY27 earnings conference call of TASUS Networks Limited. We have the management of Tejas Networks on this call, represented by Mr. Arnab Roy, Managing Director and CEO, Mr. ABS Prasad, CFO, Dr. Kumar and Sivarajan, CTO, and Mr. Sanjay Malik, Chief Strategy and Business Officer. I would now like to invite Mr. Arnab Roy to initiate with opening remarks, post which we will have a Q&A session. Thank you and over to you, sir.

Thank you. Good morning, everyone, and welcome to our earnings call presentation for Q1. So I'll start with our revenues of Q1, which was 402 crores, slight 20% growth over Q4. Profit after tax increased slightly, and, you know, same for order group, which also saw a small growth. In terms of the revenue mix, it was evenly split between India and international, and we'll add some color to that as we get along. From a closing order book, this quarter, most of our business wins were domestic. That's why India, at the end of the quarter, the order book was 93% domestic orders and 7% international. In terms of Q1 highlights, our revenues were driven largely by international shipments of 5G radios and domestic shipments of optical and FT-TX products. And this international shipment was to a customer in Europe, and this was one of our first significant customer wins for 5G internationally. And the other highlight was our first commercial end-to-end 5G network deployment win, and a commercial win for our end-to-end 5G network deployment in South America. And end-to-end basically means it's beyond the radios. It's also the baseband unit and the core. So this represents a complete end-to-end technology stack for our 5G network deployment. The other highlight was we continued with our patent filings and filed 46 patents in Q1. Taking our global count to 722. And now I'll hand you over to our CFO, Invis Prasad, for walking you through the financial numbers.

Good morning, everyone. Thanks, Arnav. As indicated, the revenue is around 402 crores, a 21% quarter-on-quarter increase compared to quarter 4 or 526. At a PBT level, PBT is around negative 271, compared to 281 crores in quarter four. Coming to the balance sheet items, in terms of inventory, there is a reduction of inventory from the previous level of 2,438 crores to 2,358 crores, and as we have been saying earlier, this inventory, the high levels of inventory on account of advanced procurements in terms of materials for addressing the add-on orders and preparedness to address the other customer requirements. And at net receivable level, the net receivables after the customer advance adjustments currently stand at 2,232 crores compared to 1,905 crores, an increase in terms of net receivable, resulting in the working capital. The net working capital increased mainly on account of the net correspondingly increased to 505 is mainly, as what I mentioned earlier, in terms of net working capital increase as well as increased payouts, and also the company's focus in terms of continued investments in terms of capex, so there's an increase in terms of the borrowings. The gross borrowing stands at $4,866, and net borrowings at $4,277.

Thanks, Prasad. I'll now take you to some more details about our business for Q1 as well as the outlook. So to give you a little bit more color about Q1, one of the highlights was, as I mentioned, the end-to-end 5G network win for an operator in South America. And the supply of 5G massive MIMO radios to a global customer in partnership with NEC. We were also selected by a global Tier 1 telco for a joint R&D project in 5G. And this is something of quite a lot of significance for us because, you know, successful execution over here will – we expect will lead to future increase in our business engagement in terms of product shipments and so on. And lastly, we are still awaiting the expansion order for the BSNL 4G, the additional 26,000 sites. And, you know, there has been a lot of news items about this recently. And I can only comment that it's in the final stages of conclusion in terms of awarding of the order. You know, there's a discussion with our system integration partners regarding the final T and C and so on. And we expect that this thing will materialize very soon, probably in this quarter. So, as you can see from the first three items, the international traction for our wireless products and technology is increasing, which is a very encouraging sign for us. In terms of wireline, we continue to expand our market share and business with Tier 1 Indian telcos for optical as well as FTTX products. And for Tier 1 telco, we expanded our FTX footprint for the pan-India residential broadband rollout. For two other Tier 1s, we expanded. We supplied our optical equipment, 100-gig, 400-gig DWDM equipment for the 5G backhaul networks, for the enterprise service services networks, and also for hyperscaler data center connectivity. The utilities continues to be a strong sector for us, and we were selected as a vendor for the communication network modernization of a large power utility. This has been a very successful business for us, and we continue to win newer and newer business as the utilities keep modernizing their networks from the older TDM, SDH network to a more IP-based network. Internationally, our optical products continued to win additional market share, and this was for an existing customer in Africa, a leading wholesale bandwidth provider, and we did a lot of network expansions for him using our state-of-the-art 100-gig, 400-gig coherent DWDMA equipment. A few other highlights. Our newer product, which was announced recently, the 1600D3, the data center interconnect product, it was selected as a global finalist among the top three of the prestigious Leading Lives Awards for 2026. This is indeed a recognition to be proud of because this is one of the most respected positions in the field, and the fact that they recognized us among the two other global OEMs as one of the most innovative products that were launched. This is actually a significant recognition of our R&D capabilities. We won the Bangalore Chamber of Commerce and Industry and Commerce Award for Manufacturing Excellence. We signed MOUs with IIT Gandhinagar and Maharashtra IIT to catalyze and nurture the local innovation ecosystem for next-generation telecom. We increased our patent filing. We filed 46 new patent applications, taking account to 722, of which 380 have already been granted, and the rest are in the process of analysis and

going through the next steps.

We also successfully completed the field and lab trials, the demonstration of the D2M, Our broadcast radio solution, as far, and this was also a significant milestone, which was a lot of publicity, where along with Prasad Bharati and PreStream, we were engaged in field trial, an extensive field trial for our broadcast equipment. In terms of the key business drivers for our products today, one of the important trends that we see and that we highlighted was the expansion of 5G deployment in emerging markets, and we expect the 5G rollouts to continue until 2030 and overtaking the 4G deployments at a very rapid pace. Globally, 5G is also going to serve a lot of broadband applications, and the number of subscriptions are set to triple and reach 90 million globally by 2030, and this is going to be an important application of 5G as well, which we will serve. And then the other part of it, I talked about the expansion of existing 4G networks in India and emerging international markets. Of course, the BSNL 4G is one of the key opportunities over here, but apart from that also, we see engagements in a 4G network expansion in

several emerging international markets.

In the wireline segment, the rapid growth of data centers and connectivity is driving a lot of our business, especially for the optical. And also, this is also resulting in the last mile increase in the last mile connectivity, both in terms of numbers and in terms of bandwidth. So we see the enterprise connectivity bandwidth coming up significantly, and that is leading to a lot of our equipment being purchased and deployed. We see a significant increase in residential broadband complexity, and we have Tier 1 partners in India which are driving that growth with our FPTX equipment. As the wireless networks are expanding, the backhaul connectivity for those networks, those are also a significant part of our business. And I highlighted the modernization of utility networks from the older TDM technology to IP-based networks, and that continues to be one of our key drivers. So, looking forward, you know, we see the rapid deployment and global adoption of AI as going to be one of the key drivers for our business. And to walk you through the details of what that really means, I'll hand it over to our CTO, Dr. Kumar Shivarajan.

Thank you, Arunov. So, I'll take a few minutes to outline how AI is impacting the network and also what we are doing about it. So, all of us are using AI. You know, AI is replaced search. All websites are using chatbots. We're doing a lot of image processing and fake videos and everything with AI. So, all this is immediately increased the traffic within the internet. There's a lot more computing being added in data centers, which is, of course, driving the growth of, you know, NVIDIA and the like. And the central data centers have a significant addition of computing capability for AI training. There's also computing being added at the edge for what is called AI inferencing. So this introduction of AI for pretty much everything that we do today has led to significant growth in the traffic. So AI has increased the traffic by 20x. Immediately, the optical network is being built out, both between data centers. Data centers need to be interconnected with high bandwidth and low latency connections. So the high bandwidth here is tens of terabits, and the data centers could be, you know, 100 kilometers or even 1,000 kilometers apart. Consistent with that, no, please go back to the call. Consistent with that, we also need to increase the bandwidth in the aggregation and metro network, which connects the users to the core. So, this is what is happening in the network due to AI. Now, if you look at the next slide on what we are doing about it, we are enhancing our portfolio, both wireless and optical networks, network traffic requirements based on AI. In terms of 6G, I use here broadly on wireless and what the industry is also starting to do because 6G will impact both the wireless and the optical network. So starting from the left, with the introduction of AI, we will need 6G or 5G Advanced to be able to address the new AI applications. So, this could go beyond phones to, you know, metaglasses and other devices in the next few years. This is for wireless users will access it through the 5G advance or 6G radio access network. But there is also increase in traffic going from homes and businesses. So, in homes, we are enhancing our portfolio of phone to go to 50 gig phone from the current 10 gig phone. Businesses will also be served with higher bandwidth in the access. Typically, it's 10, 100 gig today. We'll go to about 800 gig, okay? The same increase in traffic will carry through the rest of the network. So at the core of the network, today we are mostly 400 gig wavelengths. That will go to 1.2 terabit or even 1.6 terabit wavelengths. The WDM network, which typically operates on one pair of fibers And adding additional bands used to operate in this conventional band or C-band. In the last few years, we've added another band, L-band. But by 2030, we also expect to add a third band. So we'll have three bands of WDM with, you know, 100 plus wavelengths operating at speeds up to 1.6 carabits per second. So this is the future in the next few years. By 2030, I think all of these products will have to be there. And we have a significant investment in R&D across both wireless and wireline to build out this portfolio so we can take advantage and address the products needed to build out this network to supply AI. So with that, I hand it back to Arnob to conclude this presentation.

Thank you, Kumar. So, in summary, some of the key takeaways, the key messages from our business in Q1 is, first of all, growing international traction for our wireless products, our new 5G VINs in international regions and multiple other engagements with all operators. Our joint R&D partnership with Global Tier 1 Telco is also an endorsement of that. And, you know, and a lot of our credibility is also coming from our network performance in the BSNL 4G network, which is an endorsement of our product scalability and reliability, and that has given us a lot of credibility when we engage customers, including the Tier 1 telco that I'm referring to. So, in terms of wireless, the wireline business has been seeing steady growth and driven by growth in data center connectivity, residential enterprise broadband, and we have very good incumbency in the Indian private telcos, and as their business grows, we see our business expanding and as well as increasing their increasing market share in those networks as well. And finally, we are well positioned for an AI-driven future. We have a lot of investments in 5G Advanced and 6G for our wireless portfolio. And the portfolio of products, also investments for building products or building this end-to-end high-bandwidth, low-latency network required for AI infrastructure and also user life. So with this, I come to the conclusion of our presentation and open the floor for Q&A.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Tushar Khurana from Peace Wealth. Please proceed.

Yeah, hi. Thank you for your opportunity. Sir, my first question is regarding this BSNL receivables that we have. Since we are now in the final stage of getting this order for 26,000 sites, Does that mean our receivable situation should also improve and we should start getting the payment from the SNL, given that was subject to some acceptance tests that were left? Any comments on that?

I didn't get any of the last part of the statement. Your receivables and then you added given the add-on order?

So, there was some acceptance tests that were left for some of the files after which you were able to get those payments, right?

Correct, correct, correct, correct. That's okay. Acceptance test. Okay. Yeah, understood. Yeah, you know, that's correct. I think we are, you know, the expansion orders were also one of the part was also the completing of the acceptance and some of the pending features and all those kind of things. So, those are also in a very advanced stage and coming to a closure. So, yes, you're right. We expect a lot of the BSNR receivables to also get cleared during the quarter as we move along for the expansion project.

Yeah, that's wonderful, sir. And so my second question is regarding the international order bins that we have got on the wireless site for PIC, radios, and the one with the collaboration with NEC. I just want to understand these order bins are mainly for the TSPs or enterprises, and if you could quantify also the number of sites that we have begun with.

Yeah, so these are all for TSPs. All of them are for TSPs or for mobile network services, and I cannot quantify the number of sites because, you know, I don't have permission from the customers themselves kind of a thing. But more importantly, getting the incumbency, getting this reference network deployments is a really good, I think, for us, that's probably the most important thing. And as the network deployment happens and expands, I mean, this should lead to not only more business from these existing PSPs, but serve as a really good reference for other customers in those regions.

Great, great. And so this NEC, so I was reading about this, NEC was actually restructuring their 5G RAM business. So does that mean, are we going to be exclusive partner for them wherever there is NEC downfield extension happening or even say greenfield, there will be the exclusive partner for NEC where we will be doing the manufacturing for them or how is it really placed for a status network here?

Yeah, so we are their partners for their 5G radios and beyond. So, you know, their focus is on the software side for the 5G network, on the VRAN and so on. But for the varieties of radios, today's radios as well as the future ones, and in some cases, 4G radios as well, we are their kind of, you can say, their exclusive partner. Or, you know, I think the preferred partner is probably the right word to use. And, you know, because we also have a deep partnership with them for the development and manufacturing of these products. So, yes, you know, you can, with their international deployments, I mean, we should, our radios are the ones that should actually be going along with their products.

But can you also quantify what is the total market size for them right now? What kind of total business they were doing presently in the Tai Chi Rang side?

Yeah, I don't have those numbers with me right now. I have one of those numbers with me right now, and I know they have a significant business in Japan and a significant business in Europe, and we are looking at this partnership of getting market traction in those markets along with them.

Okay, okay. That's all for my part. Thank you so much. Thanks, Prashant.

Thank you. We take the next question from the line of Janice Chaita from Kempfin Family Office.

Good morning, sir. I'm audible. Yes, you are. Sir, just one question from my side.

Now, since in the BSNL there was a performance payment that was there, are there similar conditions in the international orders as well?

No, no, there are no such conditions because for the international orders, they have, especially the one that in South America and the other one also, the purchase orders came after an extensive POC. So, it's already proven in the POC network after which these orders came. So there's no payment link to those performances. But it's very important for us to have a really good performance in the network for any expansions and also further businesses and them providing a good reference network for us.

So what will be the payment cycle type for these supplies that you have made recently? Is it 60 to 90 years or longer?

Yeah, no, it will be the regular payment cycle that we have for most customers. There is nothing exceptional over here or like BFM. It's not like that. I mean, most of them are our standard. It varies between 60 to 90 days, and this is also with the same terms.

Thank you so much, sir.

Thank you. We take the next question from the line of Raja Kumar. From RK Invest, please proceed.

Yeah, good morning. Thanks for the opportunity. So, the first question is, I just wonder, what is the path to profitability?

Yeah.

So, of course, the first part is, of course, increasing our business and market share. As you know, we came off from, you know, FI25, a very successful FI25, And FIA26 results were not as expected because a lot of the deals we were expecting to close at the time didn't materialize, whereas we kept on investing on R&D for future technology development. So the first path to profitability is, of course, growing our business. And with the momentum that we have and also getting the expansion order, I mean, that will give us a lot of tailwind in that direction. Apart from that, so, of course, we have to, as a part of the growth of the business, we have to leverage our partnerships with our global OEMs partners, right, NEC and others, for growing our international business. And then, finally, optimizing our operating expenses in line with our business and, you know, cost engineering for improving margins and working capital management to reduce finance costs over time. And as you know, a lot of the inventory build-out that had been made for the expansion order, with this coming in, we expect a lot of that to go away, reducing our working capital requirements for the future. We also expect our receivables to come down with the completion of all the acceptances and delivering all the deferred features for BSNL. So, overall, I would say we are in a very positive direction, as you can see from our financial results from Q1 of 526 to Q4 to Q1. I mean, the trajectory is positive in terms of revenue, PVT, inventory, and so on. Maybe not to the scale at which we were expecting, but the positive trajectory is there. And as we continue to go along, we are growing our business. On all the parameters that I talked about, revenue, working capital, inventory, receivables, we should see a lot of positive progress on all of that. And I believe we are on the path to profitability. Okay.

Thank you so much, sir. So in terms of timeline, can we take it as anywhere between 12 to 18 months we can see a positive bottom line?

I would say, you know, there is, yeah, I mean, I would say there is a, our first target will be positive EBITDA and EBIT and then going to bad profitability as well. And yes, it will take, it will take some time, you know, 12 to 18 months is a reasonable time to expect.

Okay. Thank you so much, sir. Sir, just one more question. Just on the receivable, I see that the receivable has moved from 1,900 to 2,232 crores. So it's almost a 325 crore movement, and you've done revenues of both 400 crores this quarter. So which means almost whatever your revenue you've done, it's remaining in AR only. So, I mean, I know that there is no BSNL order in both in this current quarter and the previous quarter. So why are we seeing a sticky collection in even the non-BSNL segment also?

We had collections for the non-BSNL segment also. But, you know, with this increase in revenue, I think whatever we have shipped, the increased shipments of this quarter have gone into the receivables. That's why that's one of the reasons that you are saying the receivables haven't gone up.

Okay.

Okay, sir.

Thank you so much.

Thank you. We take the next question from the line of Sugandi, an individual with Vastu. Please proceed.

Hello, we can't hear you, Sugandi.

Yes, hi. Thank you for taking my question. A couple of things. If you could, you know, give us an idea about, you know, the warranty provision, you know, and, you know, what is the internal policy that we follow for making these provisions, because they have been a recurring item on the P&L for the last couple of quarters. And, you know, in terms of, you know, what is the origin of these provisions, because, you know, they're sizable compared to the kind of business we used to do in the pre-BSNL order era. So, you know, just trying to also figure out, you know, how to look about profitability from a long-term perspective in terms of, you know, I understand that the BSNL order is a big proof of concept for our execution in 5G. But in terms of, you know, in terms of, you know, how profitable, you know, the kind of net profit that we made from the order against, you know, the kind of provisions that we make, I'm just assuming here most of them come from, you know, RPSU businesses only. So, could you give us an idea about that?

Yeah. So I think the first question was about warranty costs, and they are usually determined by potential fault rates and repair requirements and anticipated claims during the warranty period and is driven by our cumulative installed base. So right now, the distortion that you see in this increased warranty provision is because of this large BSNL network that was rolled out. And as you've seen in our financial performance in the past, this was not a very big factor. And in the future, we also don't see this going to happen. And as the product stabilizes, which is what is happening, and the field experience matures, the warranty costs are expected to normalize. So this has been a one-off case because of the large network deployment that has happened, and it's going to stabilize and come down

as we get along. So we're on the path to that.

The other part was your question about profitability and all those kinds of things. I kind of answered that question, but driven by revenue growth, international as well as domestic, and then managing of working capital and margin improvements that will come along with the international business and so on. So I think that remains the same. While the BSNL business is there, as you can see, all our efforts and focus is on the private market, the private telco market, both in India as well as international. And during the quarter, we have made significant progress in that direction, especially – and the heartening thing to note are all our new technology investments in 5G, in optical, in FTDX. All of them are getting traction, and so kind of the vision of how these technologies would evolve and how the market would adopt them is kind of playing out. So that's the positive part. The add-on order would be a really good tailwind for us in terms of cleaning up the inventory that was built, cleaning up the receivables, and really improving our working capital and all significantly. So that's a good part of the add-on order when it comes in. But from all other parameters in terms of new business wins and international business growth, I think we are on a positive trajectory, and we hope to continue this going forward.

Sure. Sir, in terms of the add-on orders, the economics would be more or less on the same line as for the initial $1,000,000, right?

That's correct. That's correct. It's going to be on the same line.

If I'm not mistaken, there was some service revenue element which was supposed to last for a longer period. Do we accrue any revenue on account of services provided to BSNL on the existing base today? Okay.

Not yet. That's going to start. The AMCs are going to start after the site acceptance and the warranty period getting over. It's going to start. So, the significant amount of service revenues, the AMC revenues, that has not started yet.

Sorry, what is the timeline for that?

It's going to start in the next few quarters.

Sure. Okay. And if you can give us a split of the current quarter's revenues between wireless and wireline?

Yeah, I mean, we don't get into those details in terms of more revenue split, but I can, you know, definitely say there's been a significant

amount of wireless business, And, you know, that has been also been mostly international, right?

So it is a significant part, but I wouldn't like to give any numbers in terms of the wireless wireline. We don't give that. But we have said that India has been 50% and international, right? So international has been largely wireless and some wireline also for some of our existing customers.

That's encouraging. So any, and I noticed that you're not giving the order book anymore. I mean, that's a number you used to share previously. But if you could just give us a...

Yeah, we did that, right? I think I shared the number. So at the end of my first slide, if you see, was 1,529 crores, which is a slight increase over Q4, which was 1,514. So we did win during the new orders during the quarter, which has increased our order book slightly.

Sure, sir. And how much of that would be international?

If you see that, I also mentioned at the beginning of the presentation that most of the new wins

during the quarter has been for the domestic year kind of thing, apart from the South American 5G network. So that's why the split between current split of India International is like more than 90%, 92% India and 7% International. And we hope to change that profile going forward.

And I'm assuming there's no element of BSNL order in this?

There is no. No, the new add-on order is not part of this. You know, would have whatever in terms of, you know, whatever the service, revenue, AMCs, and all those kind of things for which you have to use, they would be in the backlog. So, product shipment in that as yet. The add-on revenues are not part of the backlog as of yet, the order book.

And the South American order is already included in this?

Yes, that is included in the order book.

Is that like a pilot level of, you know, contract or are we talking about, you know, slightly, is it a network rollout or, you know, just a testing sort of order that we're talking in South America? Yeah, yeah, yeah.

As I said, we went through an extensive POC for our products before we were given this order that, yes, this is the initial order for their network because operators also build, you know, most international private operators build network in steps, right? I mean, since there is nothing like a tendering process like BSNL where they buy everything together and then slowly, slowly deploy over a period of time, most of the operators buy some amount and deploy them and then expand the network as they get more customers, as they get more territory and so on. So this is like that, right? I mean, we finished the POC successfully. We won the initial order, and on the success of this, we expect additional orders to come, which we are aware of. They have network expansion requirement, but this will keep happening over time, which is usually the way it happens for most private operators.

Sir, and I noticed that, you know, after that initial increase in our employee, you know, accretion over, you know, which we saw from 2021 to 25, you know, we've had a sort of table number last year. So any guidance that you can give us? And also, you know, what you capitalize and expense put together in your R&D, how much of that would be employee expenses?

So the employee costs are more or less flat. We are managing our expenses. And I said last year we did a significant increase because even while the business was not panning out as expected, we wanted to make sure that product and technology-wise we were up and current, and that's what happened. So now that a lot of that is done, I think our employee expenses are expected to remain flat for, you know, for some more time. So that's going to happen.

That helps.

That's helpful.

That's it for myself. Let's get back in the queue. Thank you.

Thank you. We take the next question from Dalaris Pratap Malewal from Mount Intra Finance. Please proceed.

Hi, am I audible? Yes, we are. Yeah. Hi, sir. Thanks for taking my question. I just wanted to follow on from the moment that you said that we expect the AMC orders to come in from this year. So, could you just help us understand what could be the size of these contracts that we get at the time of signing of the BSNLD? I believe the management had pointed out that the initial 7,500 was for the supply equipment, and then the AMCs will come next year to also be given us thousands of crores. And, you know, and over what period would these revenues be recognized? Could you just help me on that part?

Yeah, so the

AMC revenues would be recognized over a period of eight years when it starts.

Just some detail around what could be the size of the AMC revenues.

Yeah, so we have not, you know, we will, I think, we don't have, We have not yet shared the AMC numbers for the network. I think when that materializes, we are going to, you know, share that with you. Okay.

Okay. But, see, so my understanding, the AMC revenue would be higher margin. So, is that a key component of our path to profitability as a previous participant asked? Is that something that we are factoring in? That's what I'm trying to teach you.

No, that's correct. I think the AMC revenues come with a much higher margin, obviously. So that's going to definitely help our profitability when it starts, and it's going to start in the next few quarters. It's going to start at the end of the deployment and acceptance and warranty period. But you're right. The AMCs will come with a higher margin, and impact of our financials will be positively.

Okay, and just one last detail. So when the AMC orders come in, is it going to be one large kind of a lumpy contract like the supply of equipment was, or is it more nuanced as in, you know, which circle the equipment was deployed in that circle AMC orders come in first or something of that sort?

Yeah, mostly it is going to be like that. Mostly it's going to be like that. It's going to be circle by circle AMCPOs that are going to come based on the timeline of their deployment and so on. So that's how it's going to happen. But it will be a multi-year contract. It's not going to be year after year contract. It will be a multi-year contract, but they'll come straight into circles and that's the way it will come. Okay, thank you. Thanks for taking my interest.

Thank you. Thank you. We take the next question from the line of Shailesh from Invest Yadya. Please proceed.

Hello. I have a question about D2M. So, we got an approval of D2M in last quarter. So, how is this going to pan out? Are there any orders about D2M or will there be any certainty about orders, any contract? or any particular revenue would be there. I don't want guidance, but how will be the trajectory for D2M? I want to understand that.

Yeah, yeah, yeah. I'll hand you over to our CO, Pritam, who's closely following the trial on the business, and we can...

Yeah, hello. D2M, basically, we are waiting for the Prasar Bharti tender to happen. Once the tender is out, we will be partnering with one of the SI partners like FreeStream or Anybody else who's participating, and that process will take some time. So we are at this point in time, there is no clarity on when exactly the tender happens. So that is the path it will take for us to really, you know, get into the market. The tender has to come to participate with the SI, and after the selection, we'll see the win.

So all the trials that have happened is with our equipment, exclusively with our broadcast radios?

Yeah, so I want to understand again one question about that also, that are there any other players who have got that approval of D2M in India, especially if you want to understand that?

So, there may be multiple SI partners who participate in this tender, but like Arnav mentioned, the D2M equipment, we are uniquely positioned to be one of the only players who have that kind of equipment available as of today.

There hasn't been any other POC with anybody else's equipment.

Yeah, our equipment has been done, you know, proof of concept trials.

And do you have the numbers of total time for D2M, any specific, is there any time or way where we can get the understanding of market, how large that market is?

See, if the rollout happens nationwide to the scale at which we anticipate it to happen, Then it could be close to a billion dollars of time. But, you know, it really depends on the phase at which it is rolled out. So, the rollout might happen in phases. So, it may not be all of it will happen in one shot.

So, I think it's probably better to give the number of sites controlled rationally. So, overall, if it is a nationwide rollout, we are talking about the number of sites which are very similar to what we have seen for BSNL, But it all depends on...

It will be less than the BSNL. Probably less than that. Well, the broadcast sites will be lower, so it will be lesser number of sites compared to the BSNL network.

Okay. And one last question about that. I read the news about that TCA has got the expansion deal for BSNL. So is that the same expansion that we were talking about? Is there another next phase of expansion is there for 4G?

No, this is the same expansion order that you're talking about for this 26,000 sites.

That's it for my site.

Thank you. We take the next question from the line of Rajveer Singh from Vivek Investment Managers. Please proceed.

Hi, thanks for taking my question. My first question is on the R&D data. So, this is investing heavily in R&D. Can you let me know which recent R&D investments are closest to commercialization, and when should investors expect meaningful revenue from them?

The R&D investments keep happening on a continuous basis, and a lot of it is the evolution of the technology that we play in. For example, we started our wireless journey using 4G, right? So as we were doing 4G, the natural evolution was investment in 5G, and that's what we have been investing in for the last more than 12 months, you know, more than close to 24 months we have been investing. As our 4G products were getting deployed, that investment had happened, and, you know, that is now leading to commercialization, the beginning of commercialization, and we are seeing the initial successes. So while now we expect growth in our 5G business, we have already started investing in 6G, 5G advance and 6G as well, right? So it is not one single new product which is the investment will come out and get commercialized. It's like an ongoing process and evolution of our technology, right? And similarly for optical, if you see, it's like the technology space is the same. Say, optical transmission of high-capacity traffic. And when we started optical, it was 100 gig, 10 gigabit moving to 100 gigabit, then it moved to 200. Now we are supporting up to 1.2 terabit per channel. The major deployments are happening in 400 gig and 800 gig and so on. So that happens as the technology, new innovations come in, I mean, we will be investing ahead of time before they get adopted, and as and with the adoption of those technologies happen, we'll be commercializing it. So it is – I mean, the summary is that it's not really one new product which we are launching for which we are going to see commercialization. It's like an evolution process of the technology and products that we have. Understood.

Okay. So my second question is on the competitive position. So against global vendors like Nokia, Ericsson, and Hawaii, where do they just believe it has a strong technological edge today?

So, in terms of wireless, if you see, our radio technology is really standing out, right? And that's why we get a lot of attention, especially the SNL network performance has proven the kind of the maturity of our technology. And in terms of the wide portfolio of RAN that we have or the radios that we have, and that's where the global partnerships are also coming into play, right? So from that point of view, I would say wireless, very efficient, high-performing radios, the macro radios that we have. Our entire solution with BBU has a lot of differentiators in terms of being an integrated BBU with transport and all those kind of things. So, first of all, I would say the equipment performance, and secondly, the versatility of the equipment in terms of how it can be deployed in the network and reducing the overall OPEX and CAPEX of the network, just as far as wireless goes. Similarly, from our wireline point of view, there are many differentiators. One part of this is access. We have a very strong portfolio in access where we can combine the FTDX and enterprise services and high bandwidth, low latency services in a single product using the convergence of all the technologies that we have. Our optical products are, again, absolutely state-of-the-art in terms of performance, power, density. You know, the reason that our data center product has been selected as a finalist is that we are absolutely related in terms of power and density and the services and the capacity of the product in terms of the services it offers. So I think that's, in a way, that's a minimum requirement if you want to grow in your international business as well as the Indian private telco business. So, in a nutshell, whenever we make these products, I think those differentiators are built in and designed, and then, you know, the quality of your portfolio is what really matters in terms of being able to win over the competition that you're talking about.

That sounds great, sir. My last question is on artificial intelligence. So, if AI infrastructure spending accelerates globally over the next five years, existing cases, products, do you think, would benefit without requiring additional R&D?

No, we would have to, you know, clearly increase in AI means increase in bandwidth, connecting data centers, and connecting users to the data center, which is the access. So, the current product sales will improve, but it's also required for us to develop higher capacity products, both in the access and in the core, right? And that's what I outlined. So, yes, there will be increase in our current product sales, but we also need higher capacity because networks will become higher capacity, and we are investing in that to evolve our products.

And if you see the current round of investments are happening in terms of building the central data centers, where Kumar talked about learning versus inference and so on. So as this infrastructure gets built and then the AI adoption, I think they probably have kind of scratched the surface in terms of AI adoption across the world. And when that really gets mainstream and everybody becomes a heavy user of AI, that's where the investments will move from the centralized data structures to the edge and then to the last mile, to the access to the users as well, right? And that's where Kumar talked about our 50-gig pawns and then 6G and 5G advance coming into play. So as and when that matures, the different segments of our products will see a lot more business traction, and we are kind of continuing to invest in line with the vision of how the network will evolve with that deployment.

Sounds great. Thank you so much. Those were my questions.

Thank you.

Thank you. We take the next question from the line of Rajai from Shukkam Ventures. Please proceed.

Good morning, gentlemen. Thanks for this opportunity. Just wanted to check with you, sir, for the 1.60 DWDM platform, can you name, you know, the trials are going on with the India sector or international hyperscalers? What stage are we in terms of trials? And what specific technology gap that you foresee and how quickly you think you can come closer to that? That's the first question. And the second is in your presentation, you talked a lot about the solutions that you give end-to-end. Could we have the timeline of those trials and launches possible? Thank you.

Yeah, so when I talk about 1.60 WDM, you know, if you see our current products, which are getting deployed, Also, you know, support up to 1.6 terabits per channel performance in WDM, and they are getting, you know, traction right now. And, you know, what happens is that when you support up to 1.2 terabits, you know, people actually, based on the network requirements, you know, they run the equipment at maybe 400 gigabit per channel or 800 gigabit per channel based on the capacity of the network, right? But we are seeing the capacity goes up to 1.2 terabits, and the customers have already tried it and seen it for the maximum performance, and then they buy it and deploy it for their requirements while they have tested for it for the peak performance. Similarly, the new DCI product, the DCI product, is at the initial customer engagements right now. We are positioning it for field trials and all, so I think this year we expect to go through several POCs and field trials, and maybe towards the end of the financial year or early financial year, this new product will also start seeing customer deployment and so on. But, you know, we have already positioned it across several large opportunities, both in India as well as globally. The other one, we talked about end-to-end solutions. I think I referred to end-to-end network for a 5G win. And in that end-to-end, what I referred to was the combination of our radios, our baseband equipment, and the core, which is a substantial amount of technology coming together completely from pages. So that was the wireless end-to-end solution. Now, if you combine it, the other end-to-end part of it is When you combine this wireless with our wireline products, because this wireless network, right from the radio sites connecting to the core and so on, requires a wireline network which runs over fiber. So even that network, and that's when I talk about 5G backhaul wins that I talked about during the quarter, that's where our wireline equipment also comes into play. And, yes, as of today, as a combination of wireline and wireless, we have, you know, all the products and technologies that an operator can use to build a complete network. However, I mean, that's not how all major, you know, tier one operators always have multi-ventor networks across each and every technology kind of a thing. So, you know, that's the way people purchase as well. But, yes, you know, one of our strengths is the end-to-end solutions that we have for wireless and wireline.

My bad, sorry, I was referring to the end-to-end transformation with respect to AI, AI-native BBU all the way up to NGW-DWM, so when you look at MIMO, you know, you talked about CLS bands, C++ band, DWM, so then you talked about 1.6, so I'm just trying to understand when do we see this coming into reality in the next to the forthcoming quarter, so do we see MIMO's first, you know, first commercial wins on that side, and then progressing ourselves to the 1.60 DWDM. How does that stack work? So just trying to understand how does the flow will come through.

6G will get commercialized only around 2030. Maybe 2029 will be the product. So we'll gear up in stages for that. The 256 DR massive MIMO will be what will happen. First, spectrum has to be allotted, 7 gigahertz. Then standards have to be finalized. So the date from TGPP for 6G is 2030. So we expect to have product launches just before that, probably in 2029. But we will have, you know, technology capability demonstrations and so on, starting next year, progressing towards a commercial product with full capability in that timeframe. The reason is not entirely with us. The reason is also the standards have to be finalized, the phone ecosystem, which may not be phones in 60-inch, could be other kinds of user equipment. That has to mature, right? Again, in WDM, today it's mainly C plus L band. So 1.6 teri is there. The addition of the S band will happen as the capacity crunch hits, right? And that also will happen in the next two, three years. The resband is already there, but the demand will pick up around the same time frame when the traffic scales up, when 6G gets deployed, and a lot more of this virtual reality and all that happens at the edge of the network.

And only… That leads 2029. Yeah, sure, sure.

So, we are also running out of time now, so we'll have time for one last question. Sure, sure, thanks.

Yes, I just combined two questions in one, so if you can help me answer that. So AI Edge router product, when we do testing, do we also have Sankhya's as a designed AI accelerator chip, or do we initially go with some of the AI accelerator chips that are available in the market? How do we do that, and what is the timeline for that? That is one second. And on a broader basis, do we say that from FI 27 all the way to 3031, we will have consistent revenue growth, unlike the past that we've had, and therefore we have set of growth stages like D2M plus you have AI, you have DWDM AI, AI hyperscaler business plus S6G coming in. So should we expect a consistent, progressive revenue growth from 27 to 30, 31? You know, these are the two questions. Thank you.

Yeah, maybe let me start with the second one. You know, you're right. I think we should, given the R&D investments and the products that we have, which are very relevant not only for the business opportunities today, Not only for the networks of today, but also as AI deployment happens, we kind of, Omar kind of explained how they are going to be relevant. So as that happens, you know, yes, we expect to see more business wins, more market share, and more adoption of existing as well as the new products coming in. So, yes, I think the goal is and the expectation is that next few years we should see business growth and as well as profitable growth, right? I mean, coming off the back of this large VSNL orders, right? So that is there. And as far as the edge router you're talking about, yeah, it's more of a routing product. It doesn't have any AI engine in them right now. But it is more towards enabling the scalability of edge networks connected with the, you know, that's where a lot of the AI inferencing infrastructure and all will be connected to. And this will provide, you know, the infrastructure for high bandwidth, low latency connectivity, connecting the end users to those inferencing sites. That's the main application. And so, yeah, and the technology over here is basically providing high-speed switching and low-latency communication between the end user to the edge.

Okay. Okay.

Thank you. Okay. So, yeah. So, once again, thank you very much for attending the earnings call, and if you have any further questions, feel free to reach out to our company website, and we'll be happy to answer the questions as they come along. Thank you very much.

Thank you. Ladies and gentlemen, we take that as the last question for the team and would now like to hand the conscience over to the management for their closing comments.

Yeah, yeah, yeah. No, I think I made my management comments, so thanks to everyone for attending this, and I hope you have given a good picture of the business of Q1 And the progress that we have made from FI26, looking forward, we are very bullish about our future. We are very bullish about all the investments that we have made over the past 12 months and the outlook, the industry outlook that we see from our customer base and new customers, especially in the international market. And, you know, thank you for your continued partnership, and we hope to stay engaged with you as we make progress in our business. So thank you, Anse.

Thank you. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now just connect your line.