“India should ideally have at least 100-120 million homes with high quality fiber with a minimum benchmark of at least 1 Gbps download and upload speeds.” He added that for a reasonable experience for 5G users, India needs that at least 80-85% of telecom towers have backhaul fiber connectivity, which today stands at only 35%.
“So there is still a lot of scope, where telecom operators, internet service providers and tower infrastructure companies are willing to invest. And as the 5G requirements increase, the fibre deployments in India will increase,” Agarwal said.
He explained that even as fixed wireless demand, such as that of Jio AirFiber increases, telecom companies will need to densify fibre deployment to increase carpet coverage in towns and cities.
“Firstly, even to provide the bandwidth using fixed wireless you need to take fiber upto at least 100 meters from the fixed wireless point to fixed wireless radio. You will still need a lot of densification of fiber within the cities…on every street you will now start seeing high-capacity fiber being deployed,” he said.The Mumbai-based fibre optics manufacturer had recently announced Rs 900 crore deal win with one the largest telecom operators (read: Bharti Airtel) in India. Besides having two plants in India, it has also invested $40 million in setting up its production facility in South Carolina and has also lately secured the approval for participating in US government-funded projects, Agarwal told ET.“US is a core focus market for us, which is rapidly expanding, both in terms of 5G, fiber to the home, as well as data centers. In addition, we are now seeing increasing investments from the government for connecting the unconnected and bridging the digital divide,” he said adding that STL will be one of the vendors to supply fibre to the $42.5 billion BEAD project of the US government.
“Our vision is to be amongst the top three player in the optical fiber cable globally.”
It has also completed a fundraise aggregating to Rs 1000 crore through Qualified Institutional Placement (QIP) this quarter which saw subscription from HDFC Mutual Fund, Nippon Life India, Goldman Sachs and Bandhan Mutual Fund among others.
“One of our clear objectives is to strengthen our balance sheet and to reduce our debt. So this amount will go towards debt reduction and definitely going forward, we do see that we will generate cash from the business and that will further be utilized for you know reducing our debt,” Agarwal said.
As of quarter ending December 2023, STL has reduced its net debt by Rs 174 crore from FY23 levels, it said. In the same quarter, the company also slipped into a loss of Rs 59 crore as against a profit of Rs 32 crore in the preceding quarter.
Agarwal said that softness in demand in US markets and underutilization of factories had led to inventory pile up, which ultimately weighed down on profitability. But with the BEAD project kicking off this year, those concerns are over, he said.
Sterlite is bullish on the data centre opportunity with prominent hyperscalers investing to build artificial intelligence compute capacity infrastructure globally.
“The opportunity is that AI-linked requirements will ultimately lead to more fiber requirements. A typical data centre cable has almost 7000 strands of fiber, whereas a typical telecom operator will put maybe 200-400 strands. So, capacity requirements in a data centre campus are massive,” Agarwal said.
“It’s still a small business for us today, less than 5% of our business, but certainly given the opportunity, we’ll look to scale it up,” he added.
