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Chennai IT firm shows Midas touch

December 20, 2002 12:59 IST

From a Rs 65-crore (Rs 650 million) turnover this year to a Rs 3,100 crore (Rs 31 billion) turnover next year! Sounds amazing and more so as the company in question is a home-grown Indian telecom product company.

The Chennai-based Midas Communication Technologies, started in 1994 by a group of former IIT-Madras students under the inspiration of Ashok Jhunjhunwala, professor of electrical engineering, is helping turn the dream of providing affordable rural connectivity into a reality.

The dream was spawned by TeNet, an informal group of telecommunication and networking academics at IIT-Madras. Midas was one of the several companies they promoted to help their dream come true.

Midas is riding the waves by providing a hugely low-cost technology, Rs 9,000-15,000 per phone line depending on terrain and density.

When they started their quest in the early nineties, a phone line used to cost Rs 40,000 using western technology.

The technology that Midas is licensing is called CorDECT, which provides fixed wireless connections through wireless in local loop.

The connection delivers both voice (telephone) and data (Internet) at 36/72 kbps in a radius of 10-25 km with the help of a relay base station.

The service is offered by a local service partner who has to invest around Rs 12 lakh (Rs 1.2 million) and is able to provide around 100 connections.

Bharat Sanchar Nigam Limited has ordered 550,000 CorDECT lines from Midas this year and Egypt 200,000 lines. Midas foresees selling 6-8 million lines in the next 3-4 years!

The new technology is being widely deployed not just in India but a dozen of developing countries across the world from Africa (Egypt, Nigeria, Kenya, Angola, Tunisia, Yemen and Madagascar) to South America (Argentina and Brazil) to Asia (Iran, Fiji and Nepal). Private service providers in India who have embraced this technology include Reliance Infocomm.

The company today is working on its next version of the telecom switch which will be able to save as much as 30 per cent in power costs and will be able to accommodate close to 3,000 lines.

"In the next six months, we will be releasing the next generation of our switch," says Midas Communications director Shirish B Purohit.

The company will earn around Rs 30 crore (Rs 300 million) this year in royalty fees by licensing CorDECT manufacturing to ITI, HFCL, Shyam Telecom, BSS Access of Singapore and Omniacom of Tunisia. Midas also plans to set up a manufacturing facility with a local partner in Brazil.

The big telecom service providers are only today ordering the TeNet technology but the visionaries did not wait for them to make up their minds, says its chief executive officer P G Ponnapa.

To take their technology to the villages, they floated a service company, n-Logue Communications, which by its charter decided to keep clear of the top 150 urban areas of the country.

Today n-Logue has connected 300 villages in seven states, including frontline ones such as Maharashtra and Karnataka. In the next 15 months, over 30,000 villages will be connected. It is making this possible by adding Rs 30 lakh (Rs 3 million) of its own funds to every local service provider's Rs 12 lakh (Rs 1.2 million). The World Bank is examining investing in n-Logue.

Sanjay K Pillai & Subir Roy in Chennai