Subex to hive off services business

To be pure product player

The board of Subex Systems has approved the restructuring of the flagship company so that it becomes a pure play products venture. This will be done by transferring the services business to its wholly-owned subsidiary Subex Technologies Inc.

Subash Menon, president and chief executive officer of Subex Systems, says, "This restructuring is aimed at improving focus of the company on products and further its transformation into a pure products player."

Subex operates in the telecom space and within it the revenue maximisation niche with successful solutions in fraud management and revenue assurance.

Recent acquisitions have started bearing results as their integration is almost complete and have contributed 22 per cent to the products revenue this quarter.

Continuing operations have also posted excellent growth by contributing 78 per cent to the products' revenue. Profitability is continuing to increase as a result of the growing contribution of products to overall revenue, Menon said.

Subex acquired a fraud management software package from French telecom equipment maker Alcatel, making the Indian start-up the global leader in the segment, pushing printer and computer maker Hewlett-Packard to the second place. Products from other recent acquisitions, including Lightbridge and Magardi, are integrated into Subex's portfolio, he said.

Last year, Subex earned some 55 per cent of its Rs 89 crore revenues from services, but products are most profitable and grew 60 per cent last year, Menon said.

The company now has around 10 per cent share of the $200 million global market for revenue maximisation. It expects to grow the share to 15-20 per cent of the market which in three to four years will be $300 million in size. This works out to a product revenue of $60 million by 2009.

Subex sees itself primarily as a product company and its product revenue has grown from $4 million two years ago to $9 million in 2003-04 and is slated to reach $12 million in the current year.