When Kabir Ahmed Shakir joined Tata Communications as CFO in 2020, he found the company mired in what he called “satisfactory underperformance.” The Tata Group, a massive Indian conglomerate, had bought the telecommunications company from the Indian government in 2002, and it was still largely stuck in slow-growth mode. But Shakir and CEO Amur Lakshminarayanan jump-started the company with a bold new strategy.
A hard reset: In 2020, Tata Communications was mired in a phase of “low- to mid-, sometimes mid- to high-single digit growth, low profitability, low ROIC,” Shakir told CFO Brew. “For donkey’s years, this company had negative net worth.”
Shakir and Lakshminarayanan, who started as CEO in 2019, determined that the organization needed a reset.
“We said, ‘Okay, the only way out of this is to grow,’” Shakir recalled. They launched a new strategy which revolved around “moving away from selling products to selling platforms and solutions,” he said. The plan also included improving financial fitness and making the organization more agile while adopting a go-to-market strategy that involved going “deeper with fewer” customers.
Communication technology, Shakir explained, has become the “foot in the door” Tata uses to expand its offerings to its customers. Its goal is to move “up the food chain” and no longer be thought of as simply a “dumb” pipeline provider, he said; it now also offers such solutions as unified communications as a service, cloud platforms, IoT capabilities, and more.
“We come from a telco heritage, but we don’t like to call ourselves a telco,” Shakir noted. “People are seeing what value we can add in this hyperconnected ecosystem that we all live in.” At the company’s Investor Day in June 2023, it unveiled an ambitious goal to double its data business, he said.
The strategy has been remarkably successful: Within 18 months of implementing the strategy, Tata “started delivering numbers that were record high in our history,” Shakir said. Historically the company’s EBITDA had hovered around 14%–15%, he said; under the new strategy it rose to “north of 25%.” During Tata’s latest earnings call, it reported that its data revenue had risen 20% year over year and that revenue for its digital portfolio had increased more than 50% YoY.
From soap to solutions: A cornerstone of the new strategy was “people transformation,” Shakir said. Its workforce, he said, was used to “selling point-to-point connectivity” and needed upskilling to “sell solutions instead.”
Here Shakir’s background in consumer goods proved helpful. Though he was CFO of Microsoft in India prior to joining Tata, before that he spent 23 years with Unilever in India, holding such positions as CFO of home and personal care in India, and global CFO of skin care in the UK. (“I sold soup and soap all my life,” he joked.) In the world of consumer brands, he said, he was always asking questions like “Why is SKU A more expensive than SKU B?” and being mindful of the fact that customers would evaluate “whether your brand is worth paying ten cents for.”
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Many of those same concepts carried over to communications, he found. Tata personnel needed to know why they were pricing products the way they were, and be able to “articulate the value [proposition]” to its customers. Shakir helped to introduce that more consumer-centric mindset: “Sometimes, when you’re not from the industry, you have the license to bring that vocabulary in,” he said.
Taking on the red, white, and blue: Shakir has lofty goals for Tata Communications. In particular, he’s looking toward the US market. “If you don’t have a material presence in the US, then I don’t think you can really be a global player,” he said. “We want to be a credible challenger.”
In much of the world, the company’s already known as a giant. About 30% of the world’s internet connections travel through its networks, Shakir noted. But in the US, it lacks the same brand recognition. Tata Communications wants to grow its US presence to $1 billion “in the medium term, hopefully in three to five years.” That, he says, will give it “that right level of scale, to be able to expand.”
Tata’s acquisition of streaming video provider The Switch in 2023 was aimed in part at capturing more of the US market. The company already “deliver[s] Formula One to the world,” Shakir said, but it aims to broadcast more sporting events, such as NFL and college sports games, as a way of improving its “brand presence in the US,” he said.
And Tata is also ramping up its generative AI capabilities. It inked a deal with Nvidia, and is building a “full [AI] stack,” Shakir said, adding, “our ambition is to be the national AI champion for India.”
The company can afford to think big, he said, because connectivity underpins so much of our lives. And we’ll become even more interconnected in the future, he imagines: Many people own several devices, “and none of them work if they are not connected, and everything is going to be born connected,” he observed. “I fundamentally believe that companies like us…have immense potential.”