Railtel Corporation of India Ltd Management Discussions

1. Economy Overview

Introduction

India?s economy is a dynamic and rapidly expanding force, marked by resilience and innovation. As one of the fastest-growing economies globally, it has sustained robust growth, with the GDP projected to rise by 6.5% in the fiscalyear 2024-25. This impressive expansion is supported by strong domestic demand, government-backed infrastructure projects, and a thriving manufacturing sector, which continues to attract both local and foreign investments.

On the trade front, India has shown remarkable progress. Exports have reached 33.8 lakh crores, driven by sectors like electronics, textiles, and agricultural products. Imports, on the other hand, have grown to 27.3 lakh crores, largely due to the rising demand for gold and petroleum, reflecting the country?s energy needs and consumer habits.

While the trade deficit poses challenges, it also underscores opportunities for boosting domestic production and energy efficiency.

In addressing global challenges, India has taken ambitious steps toward sustainability. The government has pledged to achieve net-zero emissions by 2070, emphasizing renewable energy adoption, electric mobility, and sustainable practices. These efforts not only align with global climate goals but also promise economic benefits through innovation and green job creation.

Overall, India?s economy is navigating a transformative phase, balancing the pursuit of growth with sustainability, inclusivity, and resilience. From its expanding global trade footprint to its commitment to clean energy, the country is shaping its economic future with a vision that combines ambition and responsibility.

(Source: www.ibef.org, www.pib.gov.in, www. worldbank.org)

1.1 Government Initiatives for country?s economy

Some of the key initiatives and developments undertaken by the Government are listed below:

• Self-Reliant India Fund: A 50,000 crore fund launched to provide equity funding to MSMEs, supporting small businesses and entrepreneurship.

• Infrastructure Investment: Capital expenditure on key infrastructure sectors grew at a rate of 38.8% from FY 2020 to FY 2024, with continued investments planned to sustain high growth.

• Renewable Energy Expansion: Capacity addition in solar and wind power increased by 15.8% year-on-year in December 2024, aligning with India?s sustainability goals.

• Ease of Doing Business 2.0: Focused on deregulation and creating a conducive environment for SMEs to thrive.

• Digital Infrastructure: Expansion of digital services and e-governance under the Digital India initiative.

These initiatives reflect the government?s commitment to fostering growth, innovation, and sustainability across various sectors.

(source: pib.gov.in, economictimes.indiatimes. com)

1.2 Road Ahead

The Indian economy in 2025-26 is expected to maintain its growth momentum, with projections indicating a GDP growth rate of 6.2% to 6.6%. This growth will be driven by strong domestic demand, supported by tax incentives introduced in the Union Budget 2025-26, which aim to boost consumer spending and disposable income. The government?s continued focus on infrastructure development, renewable energy expansion, and digital transformation will play a pivotal role in sustaining economic progress.

However, challenges such as global trade uncertainties and potential tariffs on exports to key markets like the US could pose risks to growth. To mitigate these, India is likely to strengthen its position in global supply chains and promote domestic manufacturing under initiatives like "Make in India" and the Production Linked Incentive (PLI) scheme. With a balanced approach to fostering innovation, inclusivity, and sustainability, the Indian economy is poised for resilience and long-term development in 2025-26.

(Source: www.pib.gov.in, www.economictimes.com)

2. Telecom Industry

2.1 Telecom Industry Characteristics

The telecom industry in India is one of the largest and most rapidly evolving sectors globally. With over 114 crore mobile subscribers and a growing base of internet users, it serves as a backbone for digital inclusion and economic development. The sector comprises mobile services, broadband internet, enterprise solutions, and value-added services. Dominated by private players like Reliance Jio, Bharti Airtel, and Vodafone Idea, along with public entities such as BSNL & MTNL, the industry has undergone a massive transformation in the past decade with the advent of 4G and now the rollout of 5G services.

Government initiatives have played a pivotal role in shaping the telecom landscape. Programs like Digital India, BharatNet, and PM-WANI aim to extend internet access to rural areas and bridge the digital divide. The Telecom Regulatory Authority of India (TRAI) and the Department of Telecommunications (DoT) oversee regulations, spectrum allocation, and consumer protection. Additionally, the Production

Linked Incentive (PLI) scheme is encouraging domestic manufacturing of telecom equipment, reducing reliance on imports and fostering self-reliance under the Atmanirbhar Bharat initiative. Despite its growth, the sector faces several challenges. High competition has led to reduced tariffs and shrinking profit margins, especially for smaller players. Heavy debt burdens, regulatory hurdles, and spectrum costs continue to strain telecom operators. However, with increasing demand for digital services, advancements in technologies like 5G, AI, and IoT, and continued government support, the Indian telecom industry is poised for further expansion and innovation in the coming years.

2.2 Recent trends in Telecom and Telecom Data services industry in India

India?s telecom sector is witnessing rapid advancements, especially with the ongoing 5G expansion, where subscriptions are projected to reach 35 crore by 2026, comprising 27% of all mobile users. Wireless data consumption has surged significantly, cementing India?s position as one of the largest consumers of data globally. Broadband subscriptions continue to rise steadily, driven by deeper internet penetration and supportive government programs like Digital India, which emphasize rural connectivity and digital inclusion. On the manufacturing front, India aims to produce mobile phones worth 10.8 lakh crores by 2025 26 under the Production Linked Incentive (PLI) scheme, reflecting a strong push for domestic production.

Exports have also seen a notable 42% growth in

FY24, reaching 1.3 lakh crores.

2.3 Key opportunities and Threats in the telecom services industry

The telecom services industry in India is at a pivotal stage, offering several growth opportunities,

However, the industry also faces several threats. Key opportunities and Threats are as below:

2.3.1 Opportunities

1. 5G Expansion: The rollout of 5G networks offers telecom companies the chance to provide ultra-fast internet speeds, low latency, and enhanced connectivity. This enables innovations like autonomous vehicles, smart cities, and industrial automation. Telecom providers can also monetize 5G through premium services, enterprise solutions, and partnerships with tech companies.

2. Digital Transformation: As businesses and consumers increasingly rely on digital platforms, telecom companies can capitalize on the demand for cloud computing, AI-driven solutions, and edge computing. By offering integrated digital services, telecoms can position themselves as essential partners in the digital economy.

3. Rural Connectivity: Expanding telecom networks to rural and underserved areas presents a significant growth opportunity

Government initiatives and subsidies can support this expansion, enabling telecoms to tap into new markets while contributing to digital inclusion and economic development.

4. Enterprise Solutions: Businesses are seeking advanced telecom services like unified communications, IoT connectivity, and cybersecurity solutions. Telecom companies can cater to this demand by offering tailored enterprise packages, creating a lucrative revenue stream.

5. Sustainability Initiatives: With growing awareness of environmental issues, telecom companies can invest in green technologies, such as energy-efficient networks renewable energy sources. This not only reduces operational costs but also enhances their brand image and aligns with global sustainability goals.

6. Satellite Internet: The rise of satellite-based internet services, such as those offered

Starlink and OneWeb, provides an opportunity to serve remote and hard-to-reach areas.

2.3.2 Threats

1. Cybersecurity Risks: As telecom networks become more digital and interconnected, they are increasingly vulnerable to cyberattacks and data breaches. Companies must invest heavily in cybersecurity measures to protect their infrastructure and customer data, which can strain resources.

2. Regulatory Challenges: Telecom companies operate in a highly regulated environment, with strict compliance requirements related to spectrum allocation, pricing, and consumer protection. Navigating these regulations can be complex and may impact profitability.

3. Intense Competition: The telecom industry is highly competitive, with multiple players offering similar services. This often leads to price wars, reducing profit margins and making it challenging for smaller players to survive.

4. Technological Disruption: Rapid advancements in technology can render existing infrastructure obsolete. Telecom companies must continuously invest in upgrading their networks and adopting new technologies, which can be costly and resource-intensive.

5. Geopolitical Risks: Trade restrictions, geopolitical tensions, and supply chain disruptions can affect the availability of critical telecom equipment and components, leading to delays and increased costs.

2.4 Government Initiatives for Telecom Industry

The Indian government has implemented several transformative initiatives in 2024-25 to strengthen the telecom industry and drive digital inclusion.

• 5G Rollout: India achieved one of the fastest global rollouts of 5G technology, with over 4.62 lakh 5G Base Transceiver Stations (BTS) installed, covering more than 99% of districts. This extensive deployment has enabled faster connectivity and supported advanced applications like IoT, smart cities, and industrial automation.

• 4G Saturation Project: The government approved the 4G Saturation Project to provide 4G coverage to all villages, ensuring digital inclusion across rural areas. This initiative aims to bridge the digital divide and empower rural communities with reliable internet access.

• Telecom Technology Development Fund (TTDF): The TTDF focuses on fostering innovation in advanced technologies like 5G and 6G. This fund supports research and development projects, driving technological growth and maintaining India?s competitive edge in the global telecom landscape.

• Production Linked Incentive (PLI) Scheme:

Under the PLI scheme, the telecom sector recorded investments of 4,081 crore, leading to sales worth 78,672 crore, which includes exports of 14,963 crore. Additionally, it has generated employment for 26351 individuals. This initiative boosts domestic manufacturing, reduces dependency on imports, and enhances India?s position as a global telecom hub.

• Digital Infrastructure Expansion: The number of internet subscribers in India jumped to 96.96 crore as of June 2024, showcasing a remarkable

285% growth since 2014. This expansion reflects the success of initiatives like Digital India in enhancing connectivity and empowering citizens.

• Cybersecurity Measures: The Telecom Act 2023 introduced stringent measures to protect users from cyber threats and financial frauds.

These regulations aim to safeguard the digital ecosystem and build trust among consumers.

• Foreign Direct Investment (FDI) Growth:

FDI in the telecom sector rose significantly to 5,725.8 crores during April September 2024, compared to 2,409.9 crores in the previous fiscal year. This growth highlights India?s attractiveness as a destination for global investments in telecom.

These initiatives demonstrate the government?s commitment to fostering innovation, enhancing connectivity, and ensuring the global competitiveness of India?s telecom sector.

(source: www.grantthorton.in, www.pib.gov.in)

3. IT/ICT Industry

TheIT(InformationTechnology)andICT(Information and Communication Technology) industry encompasses digital infrastructure, computing, and telecommunications services that facilitate information exchange and automation. While IT focuses on software development, hardware, cybersecurity, and emerging technologies like AI and cloud computing, ICT integrates communication tools such as mobile networks, broadband, and internet services to enhance digital connectivity across sectors like healthcare, education, finance, and governance. Together, these industries drive innovation, efficiency, and economic growth, playing a crucial role in global digital transformation.

India?s IT and ICT market continues to expand rapidly, driven by digital transformation, government initiatives, and increasing global demand. The ICT sector is expected to grow at a CAGR of 9.04%, with India emerging as one of Asia?s largest digital innovation hubs, hosting over 60,000 technology firms and 113 unicorns. The IT industry is projected to reach 29.9 lakh crores by 2026, contributing

10% to India?s GDP.

Government policies, including 100% FDI allowance,

AI adoption programs, and the Production Linked Incentive (PLI) scheme, have further accelerated growth. The telecommunications sector, accounting for 8% of India?s GDP, has seen significant investments in 5G infrastructure, enhancing digital connectivity. India?s software product industry is expected to hit 8,62,000 crore by 2025, reflecting strong global expansion. India?s IT and ICT industry has seen remarkable growth in 2024-25, reinforcing its position as a global technology hub. The sector is projected to reach 24.2 lakh crores, marking a 2.5x increase compared to previous years. Key developments in this Industry are:

• IT Exports: India?s IT exports are expected to hit 17.9 lakh crores, accounting for 18% of global IT outsourcing spending.

• Overall IT Spending: Domestic IT spending is forecasted to grow 11.2%, reaching 13.7 lakh crores.

• Employment Growth: Job opportunities in the IT sector are anticipated to rise by 15-20%, driven by demand across industries.

• Government Initiatives: The Indian government has introduced several programs, including 67 Software Technology Parks of India (STPI) centers, 100% FDI allowance, and BPO promotion schemes to boost IT growth.

• AI & Emerging Tech: The India AI Mission is set to drive advancements in artificial intelligence, reinforcing India?s leadership in cutting-edge technologies.

• Startup Ecosystem: Programs like TIDE 2.0, SAMRIDH, and GENESIS are fostering innovation and entrepreneurship in the IT sector. India?s IT industry continues to be a key driver of economic growth, contributing significantly to exports, employment, and technological advancements.

(source: www.ibef.org, www.mordorintelligence.com)

4. TRAI Regulations

The Telecom Regulatory Authority of India (TRAI) was established on 20 February 1997 by an Act of

Parliament to regulate telecom services and tariffs in the country. Prior to its formation, these functions were managed by the Central Government. TRAI?s mission is to create and nurture conditions that support the growth of telecommunications in India, enabling the nation to play a leading role in the global information society. Its key objectives include fostering a fair, transparent, and competitive environment in the telecom market. TRAI routinely issues orders and directions on matters such as tariffs, interconnections, quality of service, Direct to

Home (DTH) services, and mobile number portability to ensure balanced development across the sector. In 2024–25, TRAI introduced several forward-looking recommendations aimed at strengthening the telecom sector?s innovation and regulatory framework. Notably, it proposed a regulatory sandbox to encourage experimentation with emerging technologies and business models in a controlled environment. It also addressed challenges in Machine-to-Machine (M2M) services, including ownership transfer of M2M SIMs to support the Internet of Things (IoT). TRAI further recommended creating a structured approach to spectrum sharing and leasing to optimize resource use and reduce costs. Additionally, infrastructure sharing among telecom operators was promoted to boost and speed up network deployments. The authority also suggested a revision of the National Numbering Plan to handle the increasing demand for mobile and fixed-line connections, along with proposing a streamlined framework for broadcasting service authorizations under the Telecommunications Act,

2023. These initiatives reflect TRAI?s ongoing efforts to promote innovation, regulatory clarity, and sustainable growth in the telecom industry.

(source: www.trai.gov.in, www.pib.gov.in)

5. RailTel – An Overview

RailTel Corporation of India Ltd., a Navratna PSU under the Ministry of Railways, plays a pivotal role in India?s digital infrastructure. Established in 2000, RailTel has developed one of the largest neutral telecom networks in the country, spanning over

63,000+ fiberand 7000+ railway km of optical stations. It offers telecom and ICT services like leased lines, RailWire broadband, data center and cloud services, cybersecurity, smart city solutions, and e-governance tools, enabling digital access across urban and rural India.

Network Architecture: network architecture is built on a robust, hierarchical model, featuring

SDH, PTN, DWDM, and IP-MPLS technologies. With over 11,000 PoPs and round-the-clock operations, RailTel provides scalable and reliable connectivity with services ranging from 2 Mbps to 400 Gbps, supporting both enterprise and government demands.

Data Center: RailTel operates Tier-III certified,

MeitY-empaneled data centers in Gurugram and

Secunderabad, offering IaaS, PaaS, and RailCloud for hybrid cloud solutions. These centers support services like co-location, disaster recovery, managed hosting, HD video conferencing, SOC services, and e-tendering. They host mission-critical applications for PSUs and government departments with 99.95% uptime SLA for cloud and 99.983% for co-location services.

Security Operation Center: To address increasing cyber threats, RailTel has established a central SoC in Gurugram, offering endpoint detection, malware analytics, threat intelligence, and vulnerability efficiency assessment. Its SOCaaS supports both on-site and off-site security event monitoring.

Wi-Fi at Stations: RailTel provides free RailWire Wi-Fi at 6,115 railway stations—one of the world?s largest public Wi-Fi networks—with over 5 lakh daily unique users. The service supports HD video streaming, downloads, and real-time work access for passengers and nearby communities.

Video Surveillance System: A network of IP-based surveillance systems is being deployed at over 4,600 stations, enhancing safety through centralized monitoring. RailTel has also implemented the e-Office platform across 236 Indian Railways units and over 80 other organizations, digitizing file movements and enabling remote work capabilities.

Hospital Management Information System: RailTel digitized healthcare delivery for Indian Railways through HMIS in 713 units, integrating

DigiLocker, UMID, and ABHA systems. It processes

50,000 prescriptions daily and has recorded millions of healthcare transactions, supporting over 50 lakh beneficiaries.

R&D/Innovation: RailTel has committed 9.42 crore to R&D/innovations in FY 2024 25, developing solutions like Network Detection and Response (NDR), MySecureMachine, automated ticketing, an in-house SIEM system using ELK stack, TDM-over-IP migration using smart optics, and software-based

Virtual Route Reflectors (VRR) to scale networks efficiently.

Internationally, RailTel is executing telecom and e-governance projects such as in Jamaica and scaling globally through a new international marketing team. It continues to serve major public and private clients through strategic service integrator projects.

5.1 Risks and Concerns

RailTel operates in an environment marked by rapid technological change and dynamic market forces. To navigate these complexities, the Company has establishedastructuredriskmanagementframework overseen by the Board-level Audit Committee and the Apex Risk Management Committee.

Strategic Risks: The Company?s strong association with Indian Railways presents opportunities but also poses concentration risks. While Railways remain a key client, RailTel is actively diversifying its portfolio across sectors like Defence, Healthcare, Mining, and OTT.

Operational Risks: Large-scale projects involve potential for time and cost overruns. RailTel mitigates this through milestone-based project execution and close monitoring of progress. Financial Risks: Credit risk is carefully managed using an expected credit loss model. With a significant PSU and Government client base, collection reliability remains strong. Liquidity risk is well-contained, with sufficient cash and bank balances maintained to meet operational and project-related obligations. Market risk exposure is minimal, as investments are primarily in liquid mutual funds.

Project and Insurable Risks: Execution risks are proactively addressed through detailed planning and strong project governance. All major projects and assets are covered by comprehensive insurance policies, mitigating potential insurable risks.

Contingent Liabilities: The Company maintains adequate disclosures and provisions. As of March 31, 2025:

• Bank Guarantees issued: 72,395 lakh.

• Claims not acknowledged as debts: 42,841 lakh.

• Impairment recognised on NE Project: 12,097 lakh (cumulative).

Cybersecurity and Technological Risks: Given increasing digitisation, RailTel invests substantially in cybersecurity measures and infrastructure modernisation to remain resilient against emerging threats.

With its proactive risk management culture, strong governance practices, and commitment to operational excellence, RailTel is well-prepared to address existing and emerging risks while pursuing its growth agenda.

5.2 Future Outlook

RailTel is entering FY 2025-26 with an order book of approximately 6,000 plus Cr and diversified growth prospects.

Key focus areas:

• Railway ICT and signalling projects: LTE-R,

KAVACH, Tunnel Communication.

• Expanding Data Centre and Cloud services (new Noida DC, 102 Edge DCs).

• Growing RailWire broadband with state partnerships.

• Scaling cybersecurity services.

• Pursuing international markets.

• Diversification across Defence, Mining,

Healthcare, OTT, Banking.

RailTel remains committed to contributing to India?s Digital Mission and modernizing Railway operations, while expanding into new verticals and geographies.

6. Financial Performance:

6.1 FY 2024-25 has been another landmark year for RailTel with keys figures as :

• Revenue from Operations: 3,478 Cr (35%

YoY growth).

• Profit Before Tax: 402 Cr.

• Profit After Tax: 300 Cr.

• EPS: 9.34 (up from 7.67)

RailTel?s Return on Net Worth witnessed a notable increase from 13.47% in FY 2023-24 to 14.99% in FY

2024-25, reflecting improved financial performance and profitability.

RailTel recorded significant growth across its Telecom

Services and Project Implementation segments in

FY 2024-25. Telecom Services generated 1,363 Cr in revenue, driven by NLD, IP-1, MPLS VPN, FTTH

(RailWire), RailWire, Data Centre & Cloud Services. RailTel also played a pivotal role in national ICT initiatives, connecting 765 research and academic institutions via the National Knowledge Network (NKN) and expanding public Wi-Fi access under PM-WANI.

Meanwhile, RailTel?s Projects segment surpassed

Telecom revenue for the first time, reaching

2,115 Cr. Major projects included Electronic Interlocking, LTE-R rollouts, IP/MPLS networks,

KAVACH, and Tunnel Communication. RailTel drove digital transformation across Indian Railways, implementing NIC e-Office, Video Surveillance

(5,000+ stations), HMIS (709 healthcare facilities), and Public Wi-Fi (6,115 stations). Additionally, RailTel secured OTT platform development for Prasar Bharati, Health MIS for BMC Mumbai, and Smart Mining Enforcement for the Government of Madhya Pradesh, reinforcing its leadership in ICT solutions.

6.2 Revenue across business segments:

• National Long Distance (NLD) Services:

Contributed 622 crore, driven by demand from telecom operators, government agencies, and large enterprises.

• InternetandBroadband(RailWire):Generated

341 crore, with user base increasing to over

5.78 lakh active subscribers.

• IP-1 Infrastructure Services: Brought in 99 crore from tower colocation and dark fiber leasing, reflecting strong monetization of its assets.

• ICT and Digital Services: Earned 193 crore from cloud, AI, and digital transformation projects.

• Overall ISP Services: Under ISP license (Internet & Broadband), RailTel has achieved revenues of

437 Crores

6.3 Key financial ratios

There is no significant compared to previous financial year) in key financial ratios during the FY 2024-25.

Notably, RailTel remains a debt-free and consistently dividend-paying PSU, reflecting sound financial discipline and operational efficiency. With strong asset utilization, stable cash flows, and prudent financial management, RailTel is well-positioned to support India?s digital transformation while maintaining a solid financial foundation.

7. Organizational Design & Business Expansion

RailTel continues to evolve its organizational design to meet the changing business landscape, particularly by expanding enterprise IT services and executing ICT projects. This transformation strengthens RailTel?s role in digital infrastructure and ensures its alignment with national initiatives for advanced telecom and IT solutions. To improve customer service and cost efficiency, RailTel is focused on refining its internal processes, including service assurance, key account management, and management information systems (MIS). These improvements optimize operational efficiency and competitiveness, ensuring seamless telecom and ICT service delivery.

RailTel prioritizes employee satisfaction through technology-driven solutions like e-office and ERP systems, enhancing efficiency. The organization recruits skilled professionals to meet evolving demands and maintains a diverse workforce of 881 employees as of March 2025.

8. ESG & Sustainability Initiatives

RailTel is committed to environmental, social, and governance (ESG) principles, adhering to frameworks like SEBI?s BRSR and the UN SDGs. Key initiatives include energy conservation, emission monitoring, and responsible waste management. The company also prioritizes employee well-being, equal opportunities, and adherence to ethical governance policies, ensuring transparency and integrity.

9. Employee Health & Safety

RailTel implements workplace safety measures and organizes medical camps in collaboration with hospitals. Initiatives include Yoga Day celebrations, TB awareness programs, and pledges for a TB-free India.

10. Internal Control Systems and Their Adequacy

RailTel has an extensive internal control system covering operations, financial reporting, IT systems, and compliance. Key highlights:

• Regular internal audits by reputed firms.

• Risk Management Framework monitored by the Board-level Risk Management Committee.

• Strong project management practices.

• Cybersecurity Operations Centre (SOC).

• Data protection policies in line with industry best practices.

Cautionary Statement

The Director?s Report and Management Discussion

& Analysis contain forward-looking statements regarding RailTel?s objectives, projections, and expectations. These statements, while based on current assessments, are subject to various external risks and uncertainties that could lead to outcomes differing from expectations.

Key influencing factors include economic conditions, government policies, legal challenges, and industrial relations, all of which may impact RailTel?s actual performance and growth. Given the inherent uncertainties, stakeholders are advised to exercise caution and avoid placing undue reliance on these forward-looking statements.