SUBEX Chairmans Speech

To the stakeholders


We are standing at an important juncture in the history of Subex.


Over the last four years, a considerable focus was invested in transforming our Company from a debt-heavy organization to a deleveraged Balance Sheet. From a point in FY13 where we had around US$100 million in debt, we progressively equities our foreign currency convertible debt and overseas foreign currency debt. The result is that we stand with a debt of only US$ 28.76 million and a considerably lighter Balance Sheet. Subsequent to 31st March 2017, the Company has repaid US$ 12 million loan thereby, reducing the outstanding debt to US$ 16.76 million.


This transformed Balance Sheet empowered Subex to improve its operating performance. During FY17, Subex reported a 10.81% improvement in revenues and a 46.39% growth in EBIDTA. The Company repaid RS,21.1 crore of working capital debt in 2015-16 and RS,18.05 crore in 2016-17, which strengthened our net debt-equity ratio from 0.45 in 2015-16 and to 0.36 in 2016-17, translating into a rating upgrade by India Ratings IND BBB from IND BBB.


Sectoral changes


The year under review was marked by exciting realities across the global telecom landscape. We have seen large global telcos acquiring media companies to launch new digital services to own digital content and win the mindshare of millennial consumers who expect a compelling experience across all walks of life. In an emerging economy like India, we saw the emergence of a digital service provider who has disrupted the telecom world by transforming data into a commodity service.


Subex has responded to this reality through a digital leap. As telcos embark on a new digital transformation journey, creating unlimited opportunities, I foresee Subex playing a critical trust-based role in helping these companies graduate to stronger business models, enhanced customer experience and optimized costs.


I believe that the coming together of these macroeconomic factors and our responsiveness will pave the way for a new chapter in our existence called ''''Subex 3.0''''.


The Subex 3.0 groundwork


Embracing changes proactively


Globally, the telecom industry is undergoing a dramatic transformation. Revenue models of global telecom companies are graduating beyond traditional avenues like voice and data. Subscriber bases have begun to stagnate following the commoditization of voice and data services and cannibalization by over-the-top players offering similar services. Hence, communication service providers are launching new digital services like cloud and hosting,


M2M and IoT, security,


IP communication and collaboration, data and analytics, enterprise mobility, finance and payments, among others, with the objective to enhance customer experience, improve loyalty and strengthen revenues.


There is a growing consensus that digital is indeed the future. Digital transformation is enriching the customer experience and increasing efficiency. The advent of digitization has transformed the way telcos work, attracting engagements with digital content providers, insurance players, app developers and media companies. By 2020, digital services could account for more than 10% of the overall revenues of global telecom players.


I believe that with great opportunity comes large challenges. The emergence of new business models has widened and deepened risks. For instance, Yahoo''''s market share declined following the leak of a confidential user base information arising out of hacking.


The result of this new and challenging ecosystem is a growing premium on ''''end-to-end partner management'''' as opposed to the conventional ''''partner settlement'''' platform.


Subex is attractively placed to capitalize on this reality. Subex enjoys an established presence in the assurance space; the Company''''s proven ability to counter security risks are expected to enhance visibility and acceptability in the new sectoral environment.


As telcos struggle with emerging business and technology challenges, they seek engagements with service providers


enjoying access to a large data quantum and a corresponding analytics insight. Subex is best positioned to leverage this opportunity. Over the years, the Company has aggregated a large volume of data from diverse installations, which is mined to create new revenue streams, generate critical insights and graduate the end-user experience. This competence in the cutting-edge area of predictive analytics positions Subex as a long-term telecom analytics business partner.


Offering distinctive services


There is increasing evidence to suggest that telcos find the exercise of generating data and extracting usable information difficult on account of domain-related challenges and discrete databases, among other reasons.


Subex is competently placed to address this reality. The Company possesses a large data wealth following years of engagement with large global telecom companies. The result is a competent use of state-of-the-art analytics to generate business insights around Revenue, Product, Customers and Risk.


With digital transformation, more devices are being connected with, Gartner predicting that 8.4 billion ''''connected things'''' will be in use in 2017, up by 31% from 2016. In such a scenario, increasing focus on IoT security. Subex''''s IoT security solution monitors and generates alerts to threats in near real-time Internet of Things (IoT) environments. The solution focuses on the concept of holistic ''''cyber resilience'''' from asset and incident discovery and monitoring through response and recovery.


Creating a well-governed organization


Subex is among the few Indian listed companies in its niche that is professionally-managed around a robust business model. We created an operational leadership team structure capable of managing business operations while fostering a sense of entrepreneurship. Our simplified organizational structure empowers our people with enhanced accountability and motivates them to innovate. The Company has integrated diverse functions and I am pleased to state that, this has resulted in enhanced organizational efficiency and helped deliver a superior customer experience.


Roadmap for the future


Subex is optimistic of entering a larger number of enduring customer engagements translating into larger ticket contracts. The Subex management is confident that this represents the start of an exciting phase in its journey, which we call Subex 3.0.


In this exciting Subex


3.0 journey, we will transition to becoming a telecom analytics solution provider from a business optimization provider, which will help telcos embrace digital transformation. In line with this strategy, we unveiled a new logo, which represents our vibrancy, energy and commitment to enhance value for our customers in the digital era.


Our proprietary gold mine of data, coupled with our domain knowledge and technological capabilities puts us in the best position to draw meaningful insights for our telco customers to help them drive new business models, enhance customer experience and optimize their enterprises.


This is an exciting phase in Subex''''s long and storied 25-year journey and I look forward to what the future holds for the Company and Subexians.


Regards,


Surjeet Singh


Chief Executive Officer and Managing Director

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