Mumbai: Tata Communications' payment solutions providing arm has bagged an exclusive order to install and manage nearly 14,000 ATMs for all public sector banks in Andhra Pradesh, Tamil Nadu, West Bengal, Puducherry and Andaman and Nicobar Islands by 2013-14.
The contract has been won by the company's three-year-old wholly-owned subsidiary -- Tata Communications Banking InfraSolutions (TCBIL)-- which already manages nearly 12,900 cash vending machines for 25 banks and a few co-operative banks across the country.
TCBIL, which specialises in payment solutions for the banking and financial services sector, is the single largest ATM operator. It has around 19 percent market share in terms of the number of outsourced cash vending machines and with the current order, this will go up to 21 percent, TCBIL President Sudip Kumar told a select media briefing here on Wednesday.

"With this contract, which is a huge endorsement of our competence in the banking infrasolutions space, as we commenced operations only three years ago, we have become the largest managed ATM services provider, with almost 27,000 contracted ATMs nationwide," Kumar said.
The second largest operator is the ATM manufacturer-cum- operator NCR, which enjoys 12 percent market share.
This contract award is part of the Government push for extending the reach of banking to unbanked areas. Last year, Finance Ministry had asked state-run banks to come together to launch ATMs. Accordingly, PSBs will be installing 63,000 cash machines by 2013-14 under a managed ATM services model.

Plans are also afoot to allow third-party operators to enter the fray under what is called white label ATMs, under which everything, including branding, will done by independent ATM operators for banks for a fee. The RBI has already issued a draft guidelines on white label ATMs.
On the rationale for a telecom network firm entering the banking services space, Tata Communications Chief Strategy Officer Srinivasa Addepalli said, "Already banks are our largest customers and there can be better synergy in extending our offering into the ATM space."
Asked when TCBIL, which is yet to report profit, will clock profit, Kumar did not give a direct reply but said normally an ATM takes seven to nine months to turn profitable.
Last year the company had a revenue of about Rs 180 crore, he added.
On an average, the cost of installing an ATM varies from Rs 5 to 7 lakh, and the charges an operator nets varies between Rs 6 and Rs 12 per transaction, depending on location.

Accordingly, 100 transactions a day can turn a particular site profitable after this gestation period, Kumar added.
TCBIL's first ATM went operational in July 2009 and it added nearly half of its network of 12,900 last year spanning over 300 towns or cities.

Kumar said TCBIL will function as a one-stop solution to banks for the entire value chain, from identifying sites to installing the ATM to refilling cash to maintenance.
Asked about the capex outgo on this new order both Kumar and Vaddepalli said there isn't much capex as the company will pursue opex or operational expenses model.
Which means, TCBIL will not be buying the machines but will enter into a long-term ease agreements with ATM vendors to bring down cost. "So our's is more of an opex model than a capex model," Kumar said.
However, at Rs 5-7 lakh a site, TCBIL will have to still spend around Rs 700 crore over the next two years, at the rate of Rs 5 lakh per site. The average cost of an ATM machine is Rs 2 lakh.
Under the BOT contract, TCBIL will deploy and manage 13,826 ATMs over a span of two years for all 21 PSBs in these designated market. Around 50 percent of the total roll-out will be in semi-urban and rural locations and the remaining in urban areas, on a 'pay-per use basis' Kumar said.
Under the contract, which has a tenor of nearly eight years, TCBIL will set up and manage 5,104 machines in AP, 4,697 in Tamil Nadu, 3,821 in West Bengal, 138 in Puducherry and 66 in the Andamans, Kumar said.
Apart from 12,900 ATMs, the company also manages 10,000 PoS (point of sale) terminals.


Latest News  from Business News Desk