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Manoj Bhat, CFO at Tech Mahindra
Jun 15, 2018 | Source: Mint
Manoj Bhat expects the company’s margins to improve over the next four quarters on the back of growth in both its enterprise and telecommunications businesses.
Your thoughts in terms of the growth targets:
If you look at last year, it was good. From our perspective, last year was a year of restructuring in our communications business, and the enterprise business, which grew about 19%, and about 10% organically. Clearly, the restructuring drag on our communication business is no longer there. So, you will see a resurgence of growth in that business.
On the enterprise side, we have always said that the portfolio of services and the offerings we are giving to our customers will enable us to maintain our growth rates. So, the short answer is that from our growth perspective, we do expect a reasonable uptick on the organic side, from where we were in the last year. Because of the seasonality factor in our business, quarter one will be slightly muted. But clearly, over the four-quarter period, we would expect margins to go up further.
How much of growth do you see in that vertical (telecom)?
Telecom or communication is the core for everything. From our perspective, it is a cyclical business, globally, in terms of capex spends. We have been going through a low capex phase in the telecom business for some time. But as we witness an increase in the use of data, development of applications around the internet of things (IOT), and explosion of devices, it is going to be positive. We see a lot of our customers invest in developing solutions. There is also the much talked about upgrade cycle to 5G, which people are in early-stages of evaluation. So, all bodes well for the telecom industry globally. As a leading provider to the telecom vertical, we expect growth rates to start coming back this year, as well as in the future. We see the acceleration in business as the capex cycle unfolds. We are probably at the beginning of that cycle, and we will probably see it evolve over the next few years.
Growth in telecom sector:
If I look at FY18, there are two parts playing out. One, our core business grew about 5%; and two; we did a restructuring that actually took away from that growth. Since this year, there is no drag. We expect the base growth to show up. That is why I am saying FY19 will be a growth year, compared to the declines of last two years.
When will 5G trends help Tech Mahindra?
We are seeing our customers carrying out early trials and early proofs-of-concept exercises. Our sense is that the cycle will start playing out from 2019 onwards, and the peak maybe somewhere in between 2020 and 2022.
Telecom
growth
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