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BANGALORE: A burgeoning telecom industry and an ever-growing subscriber base has given Subex Systems lots to sing about. A glorious first quarter with net profit up 110 percent over the same period last year, indicates a strong demand for its fraud management and revenue assurance products. With a strong overseas client base, the company is witnessing growing demand and acceptance for its products outside the country. This, in turn, has reversed its business statistics, and Subex now sees a larger share of revenues emanating from products, rather than services.
Sigi Achappa of CIOL met up with Subash Menon, chairman, president and CEO, Subex Systems, to discuss the trends in the telecom industry and the company's growth plans. Excerpts from an interview:
CIOL: How has Subex performed over the last year? Which specific area is the revenue coming from?
Subash Menon: Last year was quite good. We earned about Rs. 63 crore from products and Rs. 26 crore from services. And yes, the ratio has changed. We see a very positive shift toward products. Earlier, 54 percent of revenue was from services and 46 percent from products. However, over the last year, the ratio has changed to 65 percent revenue from products and 35 percent revenue from services. The shift has happened not because the services side has declined, but largely due to some very good transactions on the products side.
CIOL: Has there been a paradigm shift in your operations?
SM: We took a very conscious decision to change our focus. We gave ourselves about three years to get established, but we achieved this in about two-and-a-half years. We also managed the transition of our staff quite well. We spun off our coverage business into a different business and we only pulled out of the test equipment business.
CIOL: How is your carrier business evolving?
SM: India and China are the currently the largest markets. However, despite our growth, the financial numbers are not very good when compared to the growth rate. That is because the ARPU is one of the lowest in India. There has to be some consolidation among carriers.
CIOL: How is the RevMax enabling carriers -- Indian and overseas -- to boost ARPUs?
SM: It mainly enhances their margins, and not so much the average revenue per user. We help them to visualize their losses. Our focus is rather on reducing the bottom line, plugging leakages due to fraud, improper processes, human errors and technical errors in the entire operation chain.
CIOL: How is your Revenue Assurance System helping carriers in India and elsewhere?
SM: Fraud is an issue everywhere. Earlier, due to analog mode, most of it was technical in nature. After migrating to digital, people thought that fraud could not happen. However, that is where subscription fraud comes in. Fifty percent of the frauds are subscription frauds. This particular software conducts a pattern analysis - mapping, matching and detecting aberrations that could be due to a fraudster.
CIOL: Telecom software is a multibillion-dollar market. How do you plan to tap its potential?
SM: We need to add more products. All of our solutions address the business aspects. Typically, the products take about a year and a half to launch. We would remain within the OSS space.
CIOL: What are your expansion and investment plans over the next 18 months?
SM: We plan to launch more products, and some mergers and acquisitions are in the pipeline. We believe in being pro-active. Takeovers will be in the telecom software domain. We are targeting North America and Canada. It could be for either customer base or products, or for both these reasons.
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