India's STL sees 5G, open RAN as fiber growth factors

India-based STL (formerly Sterlite Technologies Limited) said it plans to focus on three crucial areas this year to keep growing at 20% to 25% annually.

"There are three areas that we would be focusing on this year. We would be working to build the capacity and portfolio on the optical connectivity business. Secondly, we would be taking our services business, primarily focused in India, to Europe and the UK. Lastly is our 5G Open RAN products portfolio, which we will start deploying commercially later this year," Dr. Anand Agarwal, Group CEO at STL, told Light Reading.

The company recorded revenue of INR14750 million (US$198.5 million) in the quarter ending March 2021, a growth of 27% over the previous year. The company's net income has increased from INR800 million ($10.7 million) for the March 2020 quarter to INR1240 million ($16.68 million) in March 2021.

The results are significant because last year's COVID-19 pandemic lockdown in India led to business disruption. STL had recorded a revenue of INR8760 million ($117.9 million) in the quarter ending June 2020.

"Last year, the lockdown in India had impacted the first-quarter results. This year, as of now, we are maintaining business continuity. However, this year the impact, especially on the projects and demand side, depends on the intensity of the ongoing second coronavirus wave in India," says Dr. Agarwal. Since last year India has recorded more than 19 million cases of coronavirus and more than 200,000 deaths because of the pandemic. The country experienced a massive surge in coronavirus cases last month, leading to a lockdown in several areas.

This year STL claims to have an order book of around INR1070 billion ($1.4 billion) on the back of several global and domestic deals. Out of these, projects worth INR55 billion ($740.6 billion) will be executed this year.

The projected growth is on the back of growing opportunities in the optical fiber segment in India and other geographies. The growth in data traffic is pushing the Indian telcos to expand the fiber network. Last year, STL formed a partnership with Bharti Airtel, India's second-largest service provider, to build an optical network across ten circles in the country.

Figure 1: 5G, FTTH fuel fiber growth at Sterlite

Source: Sterlite Technologies investor presentation, Feb. 2021. For a larger version of this image, click here.

The newly started European operations will play a crucial role in the company's future growth. "We have recently started our Europe services business with a team of 15 people. We would be augmenting this presence this year, and this will play a crucial role in our growth in the next few years," says Dr. Agarwal. STL recently announced a three-year deal with Openreach, the UK's largest digital network business, to provide optical cable solutions for its new broadband network.

Though STL is primarily a cable manufacturer, it has recently forayed into the wireless segment. It will look to capture a greater share of 5G open RAN segment this year. This area will see significant investment this year. The company plans to hire 200 to 250 engineers this year to grow this business. Further, STL intends to maintain an investment of 3.1% of its revenue in research and development.

STL plans to invest INR3 billion ($40 million) to expand its optical fiber capacity from 18 million km to 33 million km in India and Europe.

STL is one of the few Indian telecom vendors to make a mark globally. It is one of the largest optical fiber firms in the world, competing with Corning, Commscope and others in the fiber segment.

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– Gagandeep Kaur, contributing editor, special to Light Reading