Menu Close

Optical fiber business to see most of new investments; profitability to go up in H2: STL's Ankit Agarwal

view original post

NEW DELHI: Home-grown telecom company Sterlite Technologies Limited (STL) said that the optical fiber business will see most of its new investments having seen good success in Europe and the US market. The company will also make investments in the range of Rs 160-180 crores towards its digital and wireless businesses.

“Our core business is on the optical side and that’s where we see maximum growth. We have had some good success in Europe where we have 20% market share and 6% share in the US market. In these geographies, strong growth is expected over 5-7 years. That’s where our focus is when it comes to our investments. We are also adding a factory in North America and the UK,” Ankit Agarwal, managing director of STL told ET.

The company has also taken its board approval to raise up to Rs 1000 crore through the equity route. “We continue to evaluate what are the growth options for investments,” he said.

The company also expects to start building order book for its access business, including its 5G radio portfolio, which Agarwal said will help it generate “menagingful revenue” starting next year.

“For the access business, there is a very Good development in product buildout, including the 5G radio portfolio. We have continued engagement with telcos globally.”

STL reported Rs 5,754 crore in revenues for its fourth quarter but its profit came down to Rs 62 crore from Rs 275 crore in the same quarter last year.

Agarwal said that there is a cost increase linked to logistics including container costs and certain raw materials. “We continue to evaluate very closely. We do believe some of these costs we can pass on to some of the large customers in Europe and the US. With this cost increase, the margins are below but H2 onwards, we should start coming back to normalised levels of profitability,” he added.

The top executive said that STL will have 23-25% growth in revenue in the current year, which will take it to $1billion in revenues. “We are in a multi-year network investment period with telcos globally, we continue to see very strong demand.”

“On a sustainable basis, optical networking business growth should be in the range of 20-22% and the services business shouldn be in the 10-12% range. We continue to push forward R&D investments and in wireless and digital space,” he added.

The revenue from operations of Sterlite Technologies (STL) grew by 7.2 per cent to Rs 1,581.97 crore during the reported quarter from Rs 1,475.01 crore in the year-ago period.

STL is also focusing on building its own supply chain and is looking to diversify its vendor base.
The company is also looking to start large scale manufacturing for its access products in India. It already works with VVDN and Saankhya Labs for manufacturing.

“We continue to partner with multiple players for multiple radio platforms. Telcos looking at the full suite of radios. We have other partners on board to enable the ecosystem. We are bringing new partners on board. Lab and field trials with telcos have seen success and in the next 2-3 quarters, we can start large scale manufacturing,” he added.

Agarwal said that telcos like TeleFonica, Vodafone, Orange in Europe and some other telcos in the Middle East region are progressing quickly when it comes to their OpenRAN deployment plans. “Leading telcos in India are also scaling OpenRAN plans,” he said, implying that ecosystem development will drive the company’s access business.