The billion-dollar Midas touch

In three years, he says, his $50-million company will touch the $1-billion mark. Shirish B Purohit, CEO of Midas Communication Technologies, is supremely confident that his company's technology has the Midas touch to achieve this mammoth target.

"We have been growing at an average rate of 300 per cent and the goal is achievable," he says cooly. Telecom technology companies in the West are losing out to China, he says, and Midas is the only company in India that is developing telecom technologies.

Founded as a pure wireless-in-local-loop (WLL) company by IIT graduates from the telecommunication and computer networking (TeNet) group of IIT Madras, Midas, which started with a $10- million equity, is now a full-fledged multi-technology wireless / wireline, narrow / broadband company, as well as a manufacturer of telecom products like routers, switches, etc.

Midas was awarded the prestigious CSIR Diamond Jubilee Technology Award in 2004 for the successful commercialisation of narrow band corDECT WLL telecom technology, and for development of several broadband access products. The country's largest exporter of telecom products (FY 2004-05 exports were $14 million), it has projected export earnings of $30 million this year.

Its corDECT WLL technology brings in nearly 80 per cent of its revenue at present, but Purohit says this is likely to change in the future to 40 per cent, while the balance will come from other products.

Dialling $1 billion
Apart from corDECT, Midas is looking at micro-base stations for GSM-based technology, WiMAX in the wireless space and Ethernet-based access solutions, fibre-in- local-loop, manufacture of routers, switches and others, to reach its target turnover.

But Purohit is betting heavily on broadband. He is targeting cable TV operators and cable internet providers with a new technology called Citius (speed in Latin). Citius can use existing coaxial cable networks strung by television cable operators, to provide broadband at speeds up to 40 Mbps. It will use the existing one-way cable TV wires to deliver 40 Mbps for downloads, while uploads will be wireless, using the corDECT platform.

With the public sector outfits like Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telecom Nigam Limited (MTNL) going aggressive with their broadband based on foreign technology, the prospect for the existing Midas technology, DIAS, doesn't look too good. On the other hand, Citius is a convergent system – handling voice, video and data – and is expected to bring in good business.

With the existing countrywide copper cable landlines owned only by the two government-owned service providers BSNL and MTNL, and the city-focused private telephony companies owning the fibre-optic cables, the coaxial cable offers an alternative for a cost-effective broadband connection, not just in the cities but in small towns as well.

Purohit says Citius enables a faster rollout and a cost-effective scaling up for cable TV players. The built-in capability to handle high-quality voice makes Citius a better choice for operators offering value-added voice services. Other services like video-on-demand, interactive gaming and thin client computing can also be offered.

"Thin client computing will help faster computer penetration amongst households. With software loaded in broadband servers at the cable operator's end, the user can use a computer at his home / office with the help of just a monitor and keyboard," says R Balajee, head of the cable wireless division. The thin clients could be either rented out or sold outright.

The TeNet group is also checking out the viability of connecting a keyboard to a television set, to do basic computing like browsing, email, word processing, gaming, etc.

"For users, the broadband tariff could start from as little as Rs100. In the event that the cable gets cut, the corDECT WLL system will take over and there would be no disruption in connectivity," says Balajee. Given the fact that downtime for Indian cable TV is almost nil, internet via cable will also work 24x7x365.

With commercial deployment to take off in Jaipur and Bangalore initially, Midas is talking to cable internet providers and multi-system operators across the country. The company will also target export markets.

The Citius system comprises an interface unit (IU) that integrates the upstream data (from wireless links) and downstream data with the cable TV network, a base station (BS) mounted on a mast or tower to receive upstream data from the Citius modem, which has an Ethernet interface for computers and a cable port for downstream data. An external splitter provides connectivity to your PC and your TV. In apartment complexes, a multi-port terminal can be installed, so that individual households need not buy a modem.

Micro-base stations for GSM networks is another promising area. Today, GSM networks are not viable in areas with less than 1,000 subscribers. This is the major reason why GSM mobile players are not connecting rural areas.

"We are looking at bringing down the infrastructure cost to make GSM networks viable even where the subscriber base is low. Our micro-base stations are undergoing trials now, and commercialisation is expected around February 2006," says Dr David Koilpillai, professor of electrical engineering at IIT Madras. Midas is also looking for contract manufacturing opportunities to make routers and switches.

Midas plans to increase its headcount from 800 employees now to over 2,000 in the next three years. It also plans to tap the equity market in a couple of years. "Our existing funds ($10 million equity and $10 million debt) are sufficient for our near-term needs," says chief financial officer V Shankar.