U.S. Fibre Optic Plant, 5G Rollout To Boost Revenue, Says Sterlite Tech
Sterlite Technologies will start commercial operations at its US fibre optic plant in two months, MD Ankit Agarwal says.
Sterlite Technologies Ltd.'s soon-to-be-commissioned fibre optic plant in South Carolina, U.S., and 5G rollout will boost growth in the next five years, according to the company's top executive.
“We will make the fibre in India, but finished optical cable manufacturing will happen in the U.S.," Ankit Agarwal, managing director at the company, told BQ Prime. "We expect the operations to start in the next couple of months.”
“A capital expenditure of Rs 500 crore planned for FY23 will include investments for the U.S. factory,” he said.
India's largest optical cable manufacturer and systems integrator expects operations in the U.S., along with those in India, Brazil, China, and Italy, to help serve all key markets as demand for broadband networks and fibre-to-home picks up globally.
Sterlite Technologies, which owns over 20% market share for optical fibre cables in Europe and over 14% in the U.S., expects a strong four-to-five years network investment cycle, according to its latest earnings presentation.
“We receive over 65% of our revenue from global sales," Agarwal said. "The optical fibre cable business contributes 70% of the revenues and 30% comes from the systems integration business."
The massive 5G and fibre-to-home rollouts planned not just in India but in the U.S. and Europe will help boost the company’s financial performance over the next four-to-five years, he said.
"There will be investment opportunities to the tune of $10 billion (about 80,000 crore) in the deployment of fiber networks under the Bharat Net project, where 400,000 villages will be connected with broadband networks," he said. "We see an end-to-end opportunity for ourselves, from design to deployment to maintenance of networks."
The company, involved with BharatNet projects in Maharashtra and Telangana, has also deployed a 10,000-km network in Jammu & Kashmir for the Indian Army. Another Rs 2,000 crore of work was done for network augmentation and modernisation of the Indian navy across all their sites, he said.
According to Agarwal, the company has an order book of Rs 11,000 crore as of June 30, of which orders worth Rs 2,800 crore were received in the first quarter.
Sterlite Technologies reported a 19.25% year-on-year growth in revenue to Rs 5,754 crore during the financial year ended March 31. The net profit for the business was down 78% on the year to Rs 60 crore, the company said in its exchange filings. In Q1FY23, the company posted a loss of Rs 20 crore on a revenue of Rs 1,575 crore, up 20% on the year, the filing said.
"The losses were on account of higher import costs of raw materials linked to oil and investments on research and development in excess of Rs 50 crore," Agarwal said. "We expect to improve profitability with a drop in commodity and container prices. We are also targeting an increase of 7–10% in the product prices in the next few months," he said.
As of March 2022, the company’s net debt was Rs 2,782 crore, compared with Rs 2,410 crore a year earlier.
The company sees its customised solutions to some of the world’s largest telecom operators—British Telecom, Orange S.A, Reliance Industries Ltd., and Bharati Airtel Ltd.—as its biggest differentiator.
"Instead of working through brochures, we have preferred to partner with them (clients) in finding a solution to their problems," Agarwal said. "We have invested heavily in R&D and secured over 750 patents that have helped us to create value for our customers."
On Sept. 15, the company said, it became zero waste to landfill for all its optical fibre and cable facilities across India and Italy. In 2020, it had become the world's first optical fibre and cable manufacturer to attain the ZWL certificate for its Indian plants in Maharashtra.
The 'zero waste to landfill' is part of the company's larger goal to be Net Zero by 2030. It aims to repurpose around 99% of its industrial byproducts back into the production cycle. That includes co-processing of optical fibre cables, low-smoke-zero-halogen waste; purification of chemical byproducts for industrial usages; and precision water management.
Since 2018, the company said, it has diverted more than 1,75,000 metric tonnes of waste away from landfills, including over 42,000 MT in FY22.
The World Bank predicts that annual waste generation will increase 73% to 3.88 billion tonnes by 2050.