Railtel: Tracking the potential

Company Overview

• A “Miniratna” PSE of the GOI – Established in 2000, RailTel is the largest neutral telecom infrastructure provider and a reliable IT & ICT service provider in India.
• Key partner in Indian Railways’ Digital Transformation – Its mission is to modernize train control operations, enhance safety systems for Indian Railways, and offer nationwide broadband and VPN services
• Empowering Public Sector Enterprises – RailTel holds exclusive seamless Right of Way (ROW) along 67,956 KM of railway tracks, passing through 7325 stations, for laying optical fiber cable (OFC).
  From connectivity service provider to system integration project executor and cloud and security service provider, RailTel offers a full suite of products for public sector enterprises
• Profitable, Dividend-paying & Debt-free – The company’s orderbook is robust, amounting to Rs 5000+ crores, which bodes well for the expansion of its telecom services and project business

Opportunities

• Increase in Digital initiative: Government’s focus on a digitally empowered economy benefits sectors, doubling GDPs of core digital fields to $355-435B by 2025. RailTel’s initiatives encompass CCTV deployment, smart cities, and smart metering solutions
• Railway modernisation in Signalling and ICT areas
• 5G Prospects: Fiberized towers crucial for 5G rollout; RailTel’s 1000+ towers and extensive rail-based fiber network present opportunities.
• LTE and Kavach Project: RailTel is targeting a share of Rs 4,000-5,000 cr out of a total Rs 30,000 cr project
• Data Centers & Digitization: Engaged in diverse projects, including DRDO, SBI, Indian Coast Guard and ERNET Data Centre worth Rs. 1000+ crores. RailTel’s Pipeline – A 30 MW Data Centre in Noida & setting up 100+ Edge Data Centers poses opportunity to achieve sustained growth.
• Education & Smart Solutions: Active in education projects in Odisha, Bihar, Jharkhand, Maharashtra for Rs. 500+ crores, involving digitization, smart schools, campus connectivity, and Wi-Fi systems.

Risks
Overdependence on Govt projects – Any adverse changes in policies and budgetary allocation could affect
Limited Last mile connectivity – depends on other operators for last-mile capacity
Competition with established players in ICT industry, RailTel is late entrant in the ICT space

5000+ Cr Order Book

• State Bank of India which is one of the largest projects of providing last mile connectivity to banks on 4G LTE technology in India worth 250 crores
• Centre for Development of Advanced Computing (C-DAC) – Green field Data Centre at New Delhi and Bengaluru with Training and Support worth 280 crores
• For development of Integrated Command Control Centre for Puducherry Smart City (170cr) & Pimpri Chinchwad Smart City Pune (700 cr)
• Recent Orders Include – RVNL for r Data Centre Hosting & Application Support services (35cr), South Central Railway for comprehensive signalling and telecommunication works for provision of automatic block signalling system (120cr), N F Railway Construction for Supply,
• Installation, Testing & Commissioning of Integrated Tunnel Communication system, Emergency Call Arrangements in Tunnels & IPIS at Stations in Bhairabi- Sairang ( 76cr).

Investment Rationale –

• Beneficiary of focused investments in Digitization of Govt Entities & Indian Railways.
• Essential Partner of Indian Railways: RailTel’s extensive network of fiber optic cable & towers along railway tracks gives unique advantage in the Modernization (Signaling & Kavach) and LTE network technology transition of the Indian Railways.
• Enabling Digital Evolution: Through the execution of initiatives like the VSS, e-office, Smart City etc. RailTel is set to be a key player in propelling India’s Digital Transformation. Securing contracts from SBI and vital government projects showcases RailTel’s competence.
• Data Centre – Leveraging Tech Advancements: Surging data needs, widespread cloud adoption, enabling technologies like 5G and AI has led to persistent demand for data centers. RailTel’s involvement in critical defense network and infrastructure projects, like its partnership with DRDO labs, fosters confidence and shall open doors for many such crucial projects.
• Technological Expertise: RailTel has developed proficiency in establishing and upkeeping telecom and networking infrastructure, thus fully equipped for several potential projects of National importance.
• Facilitating 5G deployment: RailTel will serve as a catalyst for 5G service along railway corridors, especially in semi-urban and rural regions