“Our representation is that for private 5G, the rules need to be different…we cannot have the same rule of spectrum rollout obligation,” Amur Lakshminarayanan, the company’s managing director and chief executive officer, told Mint. Unlike telecom operators who serve the broader public with 5G, private networks are targeted to a customer site, and companies cannot have telecom operator-like spectrum rollout obligations, he said.
While the government is currently evaluating the prospects, Lakshminarayanan said any decision on the spectrum purchase will depend on pricing and the broader conditions set by the government.
The department of telecommunications has initiated a fresh demand survey till 31 July to assess interest in assigning 5G spectrum directly to enterprises for setting up private networks. If approved, the move could allow large firms to bypass telecom service providers for high-speed, automated connectivity within their campuses and factories.
Unlike public networks, private 5G networks operate in a closed environment, providing dedicated connectivity to industries such as manufacturing, healthcare, automotive and fast-moving consumer goods (FMCG). This ensures seamless automation and operational efficiency within factory premises and corporate campuses, free from interference from public networks.
Lakshminarayanan, however, said the private 5G demand is slow worldwide as currently enterprises have not reached a stage to realize the full potential of industrial internet of things (IoT) technology. “If in a factory, there are about 100 usecases of industrial IoT such as for workers safety, assets monitoring,etcabout 80% of them can be implemented without a 5G capability, using 4G or Wi-Fi 6 now,” Lakshminarayanan said, adding that besides direct spectrum, there is an important need to shift from wired to wireless equipments in factories for private 5G take off.
While Tata Communications is gearing up to play a bigger role in enterprise 5G, it is also managing near-term pressures, especially in its core connectivity business. The company’s profitability has come under pressure due to recent local developments, including the US tariff orders, which have led to smaller deal sizes, cautious customer spending, and pricing pressures.
In the April-June quarter, the company’s Ebitda (earnings before interest, taxes, depreciation and amortization) margin fell 125 basis points to 19.1% year over year (y-o-y).
“Uncertainty continues for customers. They don’t cancel the entire contract, but they might downsize. So, that kind of site termination and price erosion has happened,” Lakshminarayanan said. He said such headwinds slow down or push out the ambitions by a few quarters. The company has guided for a 23-25% margin by FY27.
In the Saarc (South Asian Association for Regional Cooperation) region, payment-related delays from clients have slowed business activity for Tata Communications.
Tata Communications provides enterprises with network, cloud, mobility and security services. Along with other geopolitical factors, the company’s commentary on the global tariff uncertainty triggered by the US government imposing reciprocal tariffs on countries assumes significance as 58% of its data revenue comes from international markets.
Despite ongoing macroeconomic headwinds and continued pressures across the industry, the company witnessed a “double-digit growth” in its order book during the quarter.
“At the same time, with new customers, we are able to go in and say how we are able to bring a full network transformation for them and that is the reason for a healthy funnel,” Lakshminarayanan said.
In the April-June quarter, Tata Communications posted a 6.6% y-o-y growth in consolidated revenue at ₹5,960 crore. The company’s net profit, however, fell 43% YoY to ₹190 crore during the quarter.
Data Services, which account for 87% of Tata Communications’ revenue, saw a 9.5% increase to ₹5,152 crore during the quarter. Data Services include core connectivity services, digital platforms, and connected services.
The company is seeing good traction from customers for its AI cloud offering Vayu, and is currently undertaking proof of concept for some clients.
“We have a good amount of interest. We are continuing to invest in our capabilities of the AI Studio platform,” Lakshminarayanan said, adding that the scale will come gradually.
Tata Communications is exploring partnerships with satellite internet firms along with its sister entity Nelco, Lakshminarayanan said.