Sterlite Technologies Ltd., one of the biggest providers of optical fibre cable to telecom and broadband operators in India, is expanding capacity as the pandemic accelerated digital consumption and carriers are likely to prepare for 5G rollout.
And with capacity utilisation and global demand rising, the company does not see any downside risk to pricing, according to Anand Agarwal, group chief executive officer at Sterlite Tech. Price correction won’t disrupt the company’s growth potential, Agarwal told BloombergQuint in an interview.
The management said the market misreads the spot price impact on Sterlite Technologies as the company is not in the spot business at all. Despite the fall in optical fibre prices, he said the company maintained the margins in each of the last five years in the optic fibre segment.
According to an Axis Capital note, the company’s optical fibre cable order book is at its peak and is spread over FY22 and FY23, offering revenue visibility.
Telecom operators are not alone in laying optical fibre cable networks, Agarwal said, adding that demand is also coming from cloud companies, private equity players and the government. Ports, airports and parking lots are also investing in digital infrastructure, enhancing the growth prospects, he said.
While focus on optical fibre will continue, growth will come from a combination of multiple businesses including services, he said. The company will grow at 20-25% for the next few years, with a clear focus on using cash flows to reduce absolute debt and improve the return ratios, he said.
Watch the interview with Sterlite Tech Group CEO Anand Agarwal: