L&T Technology Services on Thursday, January 12, announced that it will acquire the Smart World & Communication (SWC) business of L&T, in a bid to take offerings in next-gen communications, sustainable spaces and cybersecurity to the global market. SWC, founded in 2016 to cater to the demands of smart cities, provides smart solutions in the areas of end-to-end communications, city surveillance and intelligent traffic management system for the government as well as enterprises.

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The acquisition of SWC by LTTS will enhance digital offerings in next-gen communications, sustainable spaces and cybersecurity. SWC’s strong expertise in next-gen communications has been instrumental in network design, planning, implementation and management, including network operations center (noc), oss, datacenter, cloud/private 5G of over 25,000 locations across India.

With an employee base of over 700 engineers from a variety of technology domains and an annual revenue of Rs 1,000 crore, SWC has assisted multiple state governments in India with network operating centres and network management systems in establishing end-to-end network connectivity projects such as TANFINET and Telangana Fiber Grid.

SWC has created gEDGE data centres packed with innovation resulting in up to 40 percent reduction in power consumption and up to 30 percent savings in capex.

SWC brings capabilities around public safety, smart cities, critical infrastructure and smart metering along with L&T Fusion Platform and Integrated Command and Control Centre (IC3). It has completed mega public safety projects in Mumbai, Hyderabad and Nagpur, where tens of thousands of devices, including cameras and network equipment, have been rolled out for city level projects.

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Another notable measure of success is the Prayagraj Smart City programme, an AI-based crowd management project which has successfully controlled over 250 million people. SWC has also implemented smart metering in states like Uttar Pradesh, Haryana and Delhi to the tune of six million meters.

LTTS has been an early mover in the global communications domain, identifying 5G as a big bet in 2020. LTTS, an early mover in 5G sector, has taken ownership of 10+ labs-as-a-service for customers, 5G network assurance with over 100 use cases for clients, and more than 100 product families developed for OEMs globally.

LTTS brings smart building and experience management capabilities through its i-BEMS platform that has been deployed in the ‘world’s smartest office campus’ in Israel with over 14,000 sensors. Together, LTTS and SWC will address a larger market of $390 billion globally for sustainable spaces.

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In cybersecurity, SWC brings full lifecycle threat management capabilities, with offerings in risk assessment, threat monitoring, security architecture, design, and DevSecOps. LTTS has been offering cybersecurity services to its OT and product customers globally.

The joint team of LTTS and SWC would provide security operating centers (SOCs), full lifecycle threat management, OT cybersecurity and product security credentials and address the demands of the projected $376 billion cybersecurity market.

“The acquisition of SWC is a progression of LTTS’ 6 Big Bets strategy with a direct bearing on 5G, digital products & AI, and sustainability. SWC’s capabilities will enhance LTTS’ differentiation in the exciting field of next-gen communications with cutting edge solutions around 5G networks, sustainable spaces, along with a full stack of cybersecurity solutions to our global clientele,” Amit Chadha, CEO & Managing Director, L&T Technology Services, said.

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“The combined team of LTTS and SWC will take these offerings incubated in India to the world while bringing best practices to Indian and global customers. Look forward to doing exciting transformational programs together,” he said.

“Smart World & Communication has created a niche for itself in the communications and smart spaces domain across developing markets. By combining with a global engineering services player like LTTS, its offerings across next-gen networks, smart spaces, and cybersecurity will help unlock new synergies across the technology spectrum. LTTS is well-positioned to take these capabilities to the global market, cementing its robust leadership in the engineering and technology domain,” S.N. Subrahmanyan, CEO and MD, Larsen & Toubro Limited, said.

Chadha later told CNBC-TV18 that it reaffirms the FY25 guidance of $1.5 billion in revenue and 18% EBIT margin.

The SWC acquisition will be margin and EPS-accretive in the medium term. SWC’s business margin of 8-10% compares to 21.5% of L&T Tech margin in FY22. SWC started operations in 2016 with zero revenue and hit Rs 1,100 crore in 6 years, he said, denying any working capital issue.

SWC works with various governmental agencies, metros.

The CEO said L&T Tech services was looking to improve its 5G footprint and needed to look at this acquisition from a scale and speed point of view.

Noting that they are paying a high rate for the SWC acquisition, he expressed confidence that dividends will not get hit.

The acquisition is subject to customary closing and approvals.

First Published:Jan 12, 2023 8:58 PM IST