Tejas Networks Ltd. · NSE:TEJASNET
Tejas Networks — Investor Day (June 2015)
60 slides from Tejas Networks's investor day presentation, June 2015
Slide 1: Tejas Analyst Day Corporate Update
Tejas Analyst Day Corporate Update Sanjay Nayak, MD & CEO Tejas Networks Copyright Software Enabled Transformation www.tejasnetworks.com
Slide 2: Safe Harbor Statement
Safe Harbor Statement Certain statements in this release concerning our future growth prospects are forward-looking statements, which involve a number of risks, and uncertainties that could cause actual results to differ materially from those in such forward-looking statements due to risks or uncert
Slide 3: Tejas Networks: A Snapshot
Tejas Networks: A Snapshot Founded in year 2000 in Bangalore; Customers in more than 65 countries; Offices in 10+ countries; 700+ employees Design and Manufacturer of optical & data networking equipment that is used by telecom service providers High-capacity Optical transmission and Broadband Access
Slide 4: Enabling Data & Broadband Networks: Focus on Metro, Aggregation, Access
Enabling Data & Broadband Networks: Focus on Metro, Aggregation, Access Access Common Network Management Software Core Broadband Access Metro and Aggregation Wireline Broadband (GPON) From Mbps Tbps Wireless Broadband Converged Packet Optical (SDH/OTN) (4G 5G) Packet Transport (PTN) Nx100G DWDM P
Slide 5: Tejas Focus- Application Areas
Tejas Focus- Application Areas Next-gen Mobile Bandwidth Backhaul- 4G/5G Services Transport of cellular traffic from base Bandwidth wholesaling to telcos or stations to switching centers enterprises; Data centers Technologies: PTN, CPRI Technologies: 100G/200G DWDM, DCI Broadband Access Network & In
Slide 6: Unique Business Model- Profitable in a Challenging Global Industry
Unique Business Model- Profitable in a Challenging Global Industry Strengths of Tejas Advantage against Business Model Global Peers Use of mass-market FPGA devices, Tejas Gross Margins are close to those Ownership of silicon IPR, COST OF GOOD of global peers, despite lower Outsourced “Asset-light” M
Slide 7: Global Data Demand will Continue to Drive Optical Capex for next 5 years
Global Data Demand will Continue to Drive Optical Capex for next 5 years 50X increase in data created by 2020 78% CAGR in mobile data consumption till 87% of human 2020 population uses mobile devices 2012 2020 9 billion 50 billion Source: IT Trends and Innovations Tejas Networks Copyright Software E
Slide 8: Telecom Industry Evolution- Each disruption opens opportunities for new players
Telecom Industry Evolution- Each disruption opens opportunities for new players 1970 – 1990 1G Landline, Analog Wireless PTT US, Europe Wireless, Mobile Phones, PTT + US, Europe, 1990 – 2005 2G Internet New Operators China Mobile Broadband, Operator US, Europe, 2000 – 2015 3G Video on Internet Conso
Slide 9: Strategic Priorities for Growth
Strategic Priorities for Growth GLOBAL: INDIA: INCREASE SALES USE INCUMBENCY INVESTMENTS IN SALES TO BENEFIT FROM Continue EMERGING INVESTMENTS PENT-UP DEMAND Investments in MARKETS (AFRICA, Favourable Market FORGrowth High DATA & SE-ASIA) & GOVT. SPENDING Optical Networking CONTINUE Access TO AMERI
Slide 10: Technology Trends and Strategy
Technology Trends and Strategy Kumar N. Sivarajan Chief Technology Officer Tejas Networks Copyright Software Enabled Transformation www.tejasnetworks.com
Slide 11: Telecom Networks Today: Access to Metro to Long-haul
Telecom Networks Today: Access to Metro to Long-haul xDSL, GPON, SDH, Ethernet SDH, PTN, IP DWDM,OTN, IP IP/MPLS, DWDM, OTN Mobile Access Enterprise LH/ULH Aggregation Metro Core Access Transport Network Residential Access Tejas Networks Copyright Software Enabled Transformation Source: NGMN
Slide 12: Macro Trends Impacting our Business
Macro Trends Impacting our Business • Deeper fiber Fiberization penetration to homes, businesses, data centers and cell towers • More base stations 5G (“densification”), higher- speed access and larger capacity optical pipes • Reinvention of access Cloud with greater virtualization of network functi
Slide 13: Key Drivers of Fiberization
Key Drivers of Fiberization Applications Data Center Interconnects Smartphones, Video, IoT/M2M Exploding mobile data usage and high-definition video ecosystem (4K video) Networked devices (IoT/M2M) hitting mainstream Large investments in hyperscale data Affordable data devices and plans cent
Slide 14: 5G: New Applications to drive Network Changes
5G: New Applications to drive Network Changes Telemedicine & Robotic Surgery Precision Advanced Agriculture Public Safety with IoT & with AI/ML Drones Ultra- Reliable, Low Latency Mission- Industrial critical Automation Applications with IoT Immersive E-learning with AR/VR Tejas Networks Copyright S
Slide 15: 5G: Increased Demands on Transport Networks
5G: Increased Demands on Transport Networks Data Download Rates of up to 20 Gbps Ultra-low Latency Services Less than 1 ms Jitter/Timing precision in nanoseconds Mobile Edge Computing (e.g., Video Analytics) Intelligent Processing at the Edges to optimize backhaul bandwidth by up to 35% More Devices
Slide 16: 5G: Market Overview
5G: Market Overview Source: Ovum Global market for 5G equipment to grow to $14 billion by 2022 5G will drive accelerated investments in “crosshaul” (backhaul + front- haul), primarily over optical fiber Optical front-haul will contribute ~$1 billion to the total optical equipment expenditure in the
Slide 17: Evolution of Metro Optical Technologies
Evolution of Metro Optical Technologies 2020-22 Terabit DWDM 2018-20 channels Hyperscale 400G/600G (>100Tbps) DWDM channels Switching Multi-terabit SDN control plane Switching Up to 2017 Integrated IP 100G/200G Semi-automated routing for X2 and Coherent DWDM control plane EN-DC (5G IP aware for X2 o
Slide 18: Evolution of Access Networks
Evolution of Access Networks 2020-22 WDM-PON 2018-20 100GE, 10G xPON Nx100GE 4G/LTE Network Function 10GE/Nx10GE Virtualization Up to 2017 services GPON (2.5G) 5G Front-haul 3G FE/GE to Businesses Tejas Networks Copyright Software Enabled Transformation
Slide 19: What and How of Cloud?
What and How of Cloud? 5G uCPE 4G/5G wireless VNF VNF Public cloud Internet uCPE vOLT Enterprise vONT Residential Tejas Networks Copyright Software Enabled Transformation 19
Slide 20: Impact of "Cloudification" on the Access
Impact of “Cloudification” on the Access • Cloud makes it possible to virtualize MOBILE key network functions in software EDGE INTELLIGENCE • Popular edge appliances will be realized on servers at POPs/Data ENTERPRISE Centers • Firewall, NAT, Routing • Greater flexibility in controlling edge SOHO in
Slide 21: 5G uCPE for Enhanced Mobile Broadband
5G uCPE for Enhanced Mobile Broadband 5G uCPE will integrate optical fiber uCPE (Radio+Transport) transport and radio functions Rest of the base station functions will be implemented in the cloud uCPE will be deployed at street level close to customer premises to increase access bandwidth 5G gNB Opt
Slide 22: Enterprise uCPE for Business Services
Enterprise uCPE for Business Services Traditional WAN Access product with enhanced VNF (Virtual Network Function) processing capability Standards-based open interfaces compliant with MEF LSO (Lifecycle Services Orchestration) or MEF 55 interfaces SD-WAN Integrated WAN router and transport function w
Slide 23: Residential vCPE for Fiber Broadband
Residential vCPE for Fiber Broadband Residential CPEs will become simple, low-cost and carrier- configurable Both ONT and OLT will be virtualized vCPE (ONT) vCPE (ONT): 802.11ac WiFi, xPON ONT, 4G/5G UE optionally integrated with load balancing across xPON, Ethernet and 4G/5G OLT will also be realiz
Slide 24: Telecom Networks: 2020 and Beyond
Telecom Networks: 2020 and Beyond 5G uCPE = Radio + Transport CU VNF VNF Public cloud vOLT 600G+ WDM Enterprise Multiterabit Switching uCPE = WAN + Transport Residential vCPE = WAN+ONT Tejas Networks Copyright Software Enabled Transformation 24
Slide 25: Products and Applications
Products and Applications Arnob Roy, President-Optical Products Tejas Networks Copyright Software Enabled Transformation www.tejasnetworks.com
Slide 26: R&D and Innovation-driven Organization
R&D and Innovation-driven Organization 1 INNOVATIVE R&D PROCESSES Advanced R&D skill-sets- high entry barrier Design flexibility through FPGA based approach gives cost and time-to-market High-speed Embedded Software advantage Board Design TL9000 Quality IP reuse, unique verification environment,
Slide 27: Product Development Process – Multi-disciplinary Engineering Skills
Product Development Process – Multi-disciplinary Engineering Skills Product Specs (MRD, PRD) Product Architecture Manufacturing Mechanical Hardware Design Software Design FPGA Design Test Design Proto Build & Proto Build & Development & Development & Testing Testing Testing Simulation Testing Integr
Slide 28: Our Differentiation: Software Defined Hardware
Our Differentiation: Software Defined Hardware ™ Incorporates Key Multi-gen Support Seamless Network Cost Effective Requirements of (2G/3G,4G to 5G) Transformation Emerging Markets Software Upgrades Programmable Advanced Software Caters to SDN and Silicon Chips with and Hardware NFV Enabled, CPO Com
Slide 29: Product Portfolio
Product Portfolio Optical Products Products for Broadband Access Optical Metro Core Products New Broadband Access Products TJ1600 (integrated with optical transport) Multi-terabit Switching with DWDM, OTN, PTN and Ethernet Universal, Programmable, Dense Multi- protocol Cards High-capacity Circ
Slide 30: Unified Service Delivery serving Multiple Applications
Unified Service Delivery serving Multiple Applications Mobile Backhaul & Fronthaul 2G/3G/LTE POTP & PTN TJ1400-18 TJ1400-7 Wholesale & GE, 10GE, nx10G, nx100G, Enterprise OUT4 Meshed Core & OTU2 Bandwidth Long Haul Services TJ1400-7 TJ1400-18 L0/L1/L2 / L3 TJ1600-11 E1 to 100G TJ1400-7 Residential B
Slide 31: Application Overview: Mobile Backhaul
Application Overview: Mobile Backhaul Business Requirements $10 Bn Mobile xHaul Market by 2022 Future-proof solution with low total cost of ownership Compatible with existing 2G/3G backhaul infrastructure Flexible architecture for incorporating 5G technologies and standards Ease of evolution
Slide 32: Case Study: Converged Mobile Backhaul
Case Study: Converged Mobile Backhaul Client: One-stop telecommunication infrastructure provider with extensive terrestrial fiber Tejas Offerings: TJ1400 and TJ1600 with MPLS-TP/PTN support Feature Scenario Tejas USP Requirements Shared 3G/4G wholesale High-capacity circuit End-to-End PTN/MPLS
Slide 33: Application Overview: Wholesale Bandwidth Services
Application Overview: Wholesale Bandwidth Services Business Requirements $70Bn Ethernet Services Market by 2020 Scalable from Megabits to Gigabits “Pay as you Grow” architecture Wide choice of client interfaces, transmission media, bandwidth Ability to offer premium SLA-backed value-added se
Slide 34: Case Study: Wholesale Bandwidth Services
Case Study: Wholesale Bandwidth Services Client : Africa’s Largest Carrier of Carrier owned by Tier-1 Telcos from 14 Countries in the Continent Tejas Offerings: TJ1600 with 80 channel 100G coherent DWDM support Feature Scenario Tejas USP Requirements Universal platform for Deliver a range of H
Slide 35: Application Overview: Broadband Services
Application Overview: Broadband Services Business Requirements $7.5Bn xPON Market by 2020 Bandwidth explosion putting intense cost pressure on access networks Same access infrastructure for non-residential applications viz., backhaul and enterprise services Field hardened products for rural de
Slide 36: Case Study: Broadband Infrastructure
Case Study: Broadband Infrastructure Client: Leading Internet Service Provider (ISP) in MENA offering broadband and enterprise services Tejas Offerings: TJ1400 converged access and transport product Feature Scenario Tejas USP Requirements Converged product for Full-service operator Modular “pa
Slide 37: Application Overview: Network Modernization
Application Overview: Network Modernization Business Requirements Market Size Modernize existing optical infrastructure without changing Opportunities in multiple application segments end-points, to avoid customer churn Fixed-line Voice and 2G Mobile Voice Enterprise Leased Lines Compatibi
Slide 38: Case Study: Network Modernization
Case Study: Network Modernization Client: One of the largest interconnected networks with carrier connections throughout USA Tejas Offerings: TJ1400P, TJ1400-7 and TJ1400-18 SONET variants with circuit emulation support Feature Scenario Tejas USP Requirements Signal-agnostic network Ability to s
Slide 39: Summary
Summary High quality products and innovative R&D processes Advanced R&D skillsets with high entry barrier Flexible software-defined hardware ™ architecture Unified Service Delivery Platforms for Optical Networks Large and Growing Network Application Areas Next-gen Mobile Backhaul Wholesale Bandwidth
Slide 40: Sales Strategy
Sales Strategy Sanjay Nayak, MD & CEO Tejas Networks Copyright Software Enabled Transformation www.tejasnetworks.com
Slide 41: Revenue Trend
Revenue Trend FY18 Some large orders came late in Q4 and some slipped for FY19 De-growth in America business, primarily on account of OEM FY19 Strong opening backlog Our investments in international during FY18 are expected to show positive results Healthy business growth in India to continue Tejas
Slide 42: Global Market Opportunity
Global Market Opportunity Large addressable opportunity- we are currently focusing on countries/regions where we have a competitive advantage India, SE Asia, Africa, America Focusing on product segments and applications where we have differentiators Source: Ovum Tejas Networks Copyright Software Ena
Slide 43: India: Broadband and Data Growth Continues
India: Broadband and Data Growth Continues Massive Growth in Data and Broadband Strong Push for Fiberization & Make in India Large Capex Investments planned by Telcos on capacity expansion on Optical Fiber & 4G this FY o Over 60,000 Cr of capex planned- spend on optical infrastructure is increasin
Slide 44: India- Market Opportunity
India- Market Opportunity Government Private Healthy backlog from last FY wins from Operators are increasing their focus on Bharatnet as well as various utility accounts fiberization and network capacity Strong funnel for Bharatnet Phase-2 from upgrades- larger % of capex for optical center as well
Slide 45: SE Asia/SAARC – Market Opportunity
SE Asia/SAARC – Market Opportunity Focus countries Competitive Landscape Malaysia, Vietnam, Bangladesh, Sri Lanka, Huawei, ZTE, Ciena, Nokia, Fiberhome Cambodia, Indonesia, Philippines, Thailand Applications that are in our sweet-spot Total population: 1.06 Billion Wholesale Bandwidth, Enterprise co
Slide 46: Africa & MENA– Market Opportunity
Africa & MENA– Market Opportunity Four Regional drivers Competitive Landscape South Africa- RSA, Botswana, Mauritius, Zambia Huawei, ZTE, Nokia, Ciena,, ECI, Cisco East Africa- Kenya, Uganda, Tanzania, Ethiopia, Rwanda Applications that are in our sweet-spot West Africa- Nigeria, Ghana, Sierra Leone
Slide 47: North America Market Opportunity
North America Market Opportunity Focus on USA and Mexico Applications that are in our sweet-spot US consumes 35% of global bandwidth Network modernization- Circuit emulation, DACS replacement, SONET replacement Over 300 telecom service providers Packet aggregation and transport Optical capex per ann
Slide 48: Risks & Challenges
Risks & Challenges Customer concentration – dependence on few large customers Large dependence on India business – still contributes to majority revenues Longer than expected sales cycles in international business Aggressive pricing by competitors to win deals Talent- hiring and retention Supply cha
Slide 49: Summary
Summary Tejas is established as a pioneering technology “product” company from India Data/4G is driving demand for optical equipment; 5G will accelerate it Sustained growth momentum seen in our target markets for next 5 years India is world’s fastest growing optical networking market, where we are w
Slide 50: Finance Update
Finance Update Venkatesh Gadiyar, Chief Financial Officer Tejas Networks Copyright Software Enabled Transformation www.tejasnetworks.com
Slide 51: Revenue and operating expenses
Revenue and operating expenses Yearly trend Quarterly trend Quarterly trend • Out of total net revenue, 82% (previous year 65%) came from India, 6% (previous year 13%) • employee benefit costs constitutes 60% of came from Americas and 12% (previous year 22%) came from Rest of the World operating exp
Slide 52: Quarterly trends - profitability
Quarterly trends - profitability • The PAT for Q4 17 and Q4 18, are inclusive of deferred taxes recognised • Costs are non-linear to the revenues. Hence, EBIT/EBITDA are sensitive to the revenues Tejas Networks Copyright Software Enabled Transformation 52
Slide 53: Quarterly trends – improving working capital and cash flows
Quarterly trends – improving working capital and cash flows Credit rating • ICRA Credit rating - reaffirmed long term and short term rating for LOC is ICRA A and ICRA A1 respectively; • Outlook on long term rating revised from STABLE to POSITIVE Tejas Networks Copyright Software Enabled Transformati
Slide 54: Supply Chain Strategy
Supply Chain Strategy Sukhvinder Kumar President – Global Manufacturing Operations Tejas Networks Copyright Software Enabled Transformation www.tejasnetworks.com
Slide 55: Manufacturing Facility
Manufacturing Facility Summary State of the art Integration & Testing facility with 72000 sq. ft. built up area Dedicated shop floors for Export (EHTP) and Domestic (DTA) sales. 70+ Highly skilled and motivated Facility Building System Integration employees augmented by flexible Testing, Quali
Slide 56: Tejas Order Fulfillment Model
Tejas Order Fulfillment Model Asset light scalable operating model with a Ordering combination of outsourced PCB assembly & Planning in-house system integration & testing facility. on EMS Tie up with world class global EMS players Component for outsourcing of electronic PCB assembly Sales Foreca
Slide 57: Quality Excellence Model at Tejas
Quality Excellence Model at Tejas Quality has the first & foremost importance in our Manufacturing Operations Our Quality Excellence model is focusing on achieving Customer Satisfaction Quality Highlights: o Customer network uptime 99.999% o RITS (Return in time of Service) 0.29% o FQA (Final QA
Slide 58: Innovation Culture : 5-S & Kaizen
Innovation Culture : 5-S & Kaizen “5-S Management” is a structured, systematic approach for maintaining an organized, clean and high performing workplace • Factory divided in 11 5-S Zones with dedicated Area Leader & Auditor • Monthly 5-S round & rating criteria • Monthly 5-S Round by Senior Managem
Slide 59: Quality Policy & TL / ISO Certifications
Quality Policy & TL / ISO Certifications Tejas Networks Copyright Software Enabled Transformation
Slide 60: THANK YOU!
THANK YOU! Tejas Networks Copyright Software Enabled Transformation www.tejasnetworks.com