5G adoption, large deal focus to drive growth for Tech Mahindra

Pune: IT services firm Tech Mahindra expects 5G adoption to create a new set of services to fuel technology spends, said the company at a virtual investor meet on Monday.

The open 5G network has an addressable potential of 20-50% of a total market size of between $40-50 billion and the company is building its own intellectual property and increasing investments in network research and connected devices.

The opportunities would be around three areas, network services for telecom service providers, scaling up 5G for enterprises and R&D spends on networks and devices.

“On 5G theme, we believe Tech Mahindra to be the biggest beneficiary. Further, Tech Mahindra’s strong play in network infrastructure services differentiates it from other Indian IT (firms). TM has capabilities in radio frequency planning, design, engineering services, network rollout and post implementation network optimization and support. We believe Tech Mahindra is well-positioned to capture a fair share of 5G network services spends,” said Aniket Pande, a research analyst at Prabhudas Lilladher.

It has built a large deals team to create more deals proactively. New deal wins are back to pre-Covid levels with a healthy deal pipeline in place. The company intends to focus on increasing large deal wins and increase annuity revenues to reduce volatility.

“The company intends to reduce inefficiencies in the portfolio companies and focus on lesser geographies as a part of the restructuring exercise,” said Amit Chandra, a senior analyst at HDFC Securities. Growth in the enterprise business is expected to be strong as compared to telecom which comprises about 40% of its total revenues. Here, growth will be driven primarily by the banking and financial services vertical, healthcare and technology. 5G will also help grow the enterprise business with the possibility to cross sell services.

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Cloud migration and app modernisation are also emerging as big growth drivers for system integrators. Data and analytics is the other big segment is the other big areas where the company expects an increase in revenues over the next five years.



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