Sify Has a Great Future notwithstanding Its Losses

Sify Technologies

Sify e-Port
Sify e-Port | Source

Sify ADR is listed in the NASDAQ


Sify Technologies Spreading Its Wings to Africa and Middle East

Sify Technologies is the Indian provider of converged ICT services. It has announced a partnership with Saudi Telecom, which is the largest telecom service provider in North Africa and Middle East. The partnership will enable partners and clients to access richer portfolio of servicers, wider network of services and efficiencies of scale. This can be achieved through leveraging the strengths of the two companies in submarine and terrestrial telecom capacities and value added ICT services. Raju Vegesna is the CMD of Sify Technologies. With this partnership, the company is confident of delivering the most robust network in India, North Africa and the Middle East. Sify Technologies has acquired unparalleled and hitherto unimaginable network capabilities at the international level. Scalability and reliability are also enhanced on a global scale to the customers.

ADR Listed In NASDAQ

Sify Technologies has its ADR (American Depository Receipt) listed in the US stock exchange NASDAQ. The ADRs of Sify Technologies and Rediff.com, the two Internet companies of India were listed in at NASDAQ at the same time in 2010. The price range of the Sify Technologies ADR in 2011 was $1.18 - $8.54. Sify Technologies is operating more than 1500 e-Port Internet Cafes that enable many Indians to access the Web. The company provides Extranet and Internet services, search engine optimisation, website hosting and security solutions. Investment in these areas brings return only after a long time.

Success Depends On Broadband Penetration

The success of the company also depends on broadband penetration in India. Indian government has committed to increasing the broadband penetration to 160 million connections by the year 2014 which involves an investment of $13.4 billion. The government is set to achieve this through creation of a national broadband network. Fibre optic network will be classified as a national resource and will be made available to all the operators wishing to provide broadband services. Sify Technologies will be benefitted by this policy along with the other players.

First Private ISP in India

Enterprise business is also the next big revolution in Information Technology that is waiting to happen in Africa, Asia and Middle East. Sify Technologies, formerly called Sathyam Infoway, is aware of its potential. Sify Technologies was India’s first private Internet service provider (ISP). From then on in the late nineties, the company has graduated to the present position to provide ICT (Information, Communication and Technology) to its clients. Both telecommunications and information technology are witnessing explosive growth notwithstanding the economic slowdown and debt crisis in European Union and USA. But the key to success is to aim at a convergence of the Information technology and telecom to open up new vistas of growth.

Setting Up Data Centres for Future Growth

Even though many IT and Telecom firms may try to jump into the bandwagon, Sify Technologies will have the early mover’s advantage. Sify Technologies has already started setting up data centres. It has also invested in a subsidiary company called Sify Software Ltd for providing applications for enterprise sectors. It is not that the company had a smooth sailing from the word go. For the last six years the company has been experiencing difficulties. Even now, it is a loss making company. But what is important is that the company has identified its future growth areas namely IT, network and software.

Acquired India World for Rs.400 Crore

Network services are available in 650 cities. The company plans to increase this to 1000. Sify Technologies is investing in submarine cables. They will be operated from Mumbai, the financial capital of India. Sify Technologies is also having high hopes on IT services. Along with setting up five data centres in India, the company has created management services. Software services are mainly for creating application for the enterprise segment. Sify Technologies was also the first Indian company to be listed in the Nasdaq Stock Exchange in USA. It acquired the dotcom company India World for a price of Rs.400 crore. The company established cybercafés in the name of Sify Iways.

Sify grows on itsw technology

Actress Nayanthara in Sify.com
Actress Nayanthara in Sify.com | Source

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Sify Has a Great Future notwithstanding Its Losses


Promoter Is Committed To the Company

After the management change in the company several times, the present management headed by Raju Vegesna acquired it in 2006. Sify Technologies’ fixed assets are valued at Rs.600 crore as on date. The company has planned an investment of Rs.200 crore each for the current and next financial year. The promoter’s stake in the company is a high 86%. The promoter is committed to the company and is prepared to invest more. The investment will be used for buying international bandwidth capacity, adding more data centres, investing in managed services & people and expanding the network.

Demand for Cybercafés Has Come Down

A decade back, demand for cybercafés was high because of the low penetration of the PCs. But with rising cost of acquiring land and increasing penetration of the personal computers, supply and demand for cybercafés is coming down. A decade back, one found difficult to even enter a popular cybercafé for browsing or for other services. During holidays, one needs to book in advance for securing a seat for even one hour duration. But today the crowd has vanished with many cybercafés open to anybody who enters without prior information or booking. Therefore the cybercafé model also needs a drastic change in order to be profitable. Sify Technologies has introduced a connectivity model under which the charges will be shared with the outlet owners. The company is also expanding its cybercafés to tier-2 and tier-3 cities as the metros are already saturated for business. During the current financial year, the company has planned to add another 1000 cybercafés.

Focus On High Net Worth Individuals

For its e-commerce business, the company has decided to piggy-back on India Plaza platform and for portal business, it will be using Gmail’s platform. These measures will bring down the cost of business for Sify Technologies. It will also enable the company to focus more on movies, sports and finance. Telecommunications companies like BSNL, Airtel and Reliance are going for Digital Subscriber Line (DGL) at a cheap price to the customers. But Sify Technologies is planning to introduce and develop products like voice over IP, broadband to home and Information Technology services to HNIs (High Net worth Individuals) who also need data storage facility for document management through the use of cloud computing.

Collaboration With Voxbone And LIVE

The business enterprise operation is growing at 20% per annum steadily. It is undoubtedly a profitable business, but it also needs a huge investment in the form of data centres. Sify Technologies derives 90% of its business at present from enterprise services. Now the company wants to become a global firm. During the first quarter of the current financial year, Sify Technologies reported a net loss of $1.9 million as against a net loss of $4.05 million in the corresponding period of the previous year. Sify Software, the wholly owned subsidiary of the company has partnered with the Chennai-based Loyola Institute of Vocational Education (LIVE) to offer employment-oriented certification programme in learning design. Sify Technologies has also partnered Voxbone to provide geographical and toll-free phone numbers spread across the world. Voxbone is engaged in the business of enabling global carriers, Internet communications service providers and national operators to extend the reach of their voice service globally speedily with reduced costs.

Foray Into Cloud Computing

Sify Technologies has launched cloud-based online storage solution called Sify mystorage. It is targeted at small business and consumers. Small business entrepreneurs cannot afford to invest in large data centres and therefore can use the company’s services at reduced cost. For 10 GB data storage, the average cost works out to Rs.175 per month which is quite cheap. For the quarter ended 31.12.11, Sify Technologies reported a net loss of Rs.7.3 crore as against Rs.9.6 crore in the corresponding period of the previous year. Revenue increased to Rs.180.5 crore from Rs.173.5 crore in the corresponding period of the previous year.

Future Is Rosy

Even though Sify Technologies is a loss making company, it has a great future as it has identified its future plans and is working meticulously towards achieving them. Technology is its plus point. I would like to predict that in around five year’s time, Sify Technologies will be a company everybody will be talking around not only in India but in the world.

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