In pursuit of telecom fraud prevention

At a time when most Indian companies are still taking the software services route, Subex has kept the product flag flying high. It plans to continue this trend by launching more products in the future, says ABHINAV SINGH

SUBASH MENON expects that Subex’s average contract value with its customers will be about $70,000 next year from the present $40,000

SUBEX Systems says that most of India’s GSM operators, including Bharti, Hutch and Reliance—BSNL being the notable exception—are its clients. Ranger, its end-to-end Fraud Management System for wireless and wireline networks, has been very successful. Subex’s shares got listed on the National, Mumbai, Bangalore and Hyderabad stock exchanges in 2003, and the company plans to stick to its two-fold strategy of creating and acquiring software products.

New products

Subex is going to bring out enhanced versions of its existing products this year, as well as some new products. Says Subash Menon, the company’s president and chief executive officer, “We are hoping to rope in more customers with the products we are planning to launch. We expect that our average contract value with our customers will be about $70,000 next year from the present $40,000.” Subex hopes that some of its upcoming products will enjoy the same kind of success that its flagship Ranger has attained. Menon adds, “Ranger was able to garner the second-largest installed base in the fraud management space within three years [it was launched in 2000].”

Acquisition route

Subex acquired IVth Generation Inc. of the US in January 2000. It then bought the software products business of Canada-based Magardi Inc. (a company with a suite of revenue security products that included OUTsmart, a real-time Wireline Fraud Management System, and INcharge, a Billing Verification System) in May 2001. More acquisitions are on the cards; these are expected to be in the telecom product space. Menon says, “The acquisitions will help us in enhancing our technical expertise and also our geographical reach. It will give us access to new customers who will be part and parcel of the company we acquire.” However, Subex is not planning to ramp up its presence as far as the recruitment of talent is concerned; it aims to recruit only 50 people. Menon explains, “We are very choosy as far as recruitment is concerned; we select people with specialised skill sets. The key is to see how much revenue a person can generate for the company.”

SUDEESH YEZHUVATH reveals that Subex is planning to open an office in Western Europe, and is also looking at the Latin American and Australian markets

Into the dragon

Subex recently forayed into the Chinese market with the opening of its sales and support office in Beijing. Although the company is yet to have customer wins in the region, it is hoping to cash in on the huge telecom market in China, which has more than 500 million telephone subscribers and is seven times the size of the Indian telecom industry. To gain a foothold in the market it has entered into a partnership with BOCO Inter-Telecom, a provider of software solutions to telecommunication carriers in China; BOCO will help Subex in local sales and support.

Menon elaborates, “The Chinese telecom market presents a huge opportunity for us. During the last five years, Chinese telecom revenue has maintained an average annual growth rate of over 22 percent, and total telecom revenue was $41 billion. The revenue maximisation market in the telecom field in China is $50 million.”

Sudeesh Yezhuvath, Subex’s chief operating officer says, “After China, an office in Western Europe is next on the list. We are also looking ahead towards the Latin American and Australian markets. We plan to work with regional partners and localise our software in new geographies. Our aim, however, is to target one geography at a time.”

Big guns

Subex expects its profits to shoot up by 30-40 percent in the next 12 months. It is banking on customer references and product-related services to help it achieve this goal. Establishing a foothold abroad took some doing; the company built a strong base in the domestic market before it embarked on its international forays. Having identified a space with few players, Subex has picked the correct path. That said, though its competitors are few in number, they are big names. The company has successfully dealt with tough competition from the likes of HP, Ericsson and Alcatel in the fraud management space.

About Subex
Annual revenue	Rs 7.34 crore
Employees	270
Employees dedicated to product development and support	120
Customers	39 spread across 16 countries and 4 continents
Offices	Subex recently opened an office in Beijing, China. It plans to open one in Western Europe. It has branch offices in Ottawa in Canada, New Jersey in the US, and in Cyprus
52-week range on the NSE	Rs 195-425

Products and customers
Subex has a revenue maximisation suite called RevMax that includes Ranger (a fraud management system) and INcharge (a revenue assurance product)
Geography	Customers
North America	AmericaTel, Global Crossing, Sprint and Teleglobe
Africa	Sonatel Mobiles, Sonatel Wireline
Europe	Cyprus Telecommunication Authority and Cosmoron
India	Bharti, Reliance, BPL Mobile, Escotel, Hutch, Idea Cellular

abhinav@expresscomputeronine.com