Sterlite Technologies (STL) is exiting ‘non-core’ business areas such as wireless equipment to sharpen its focus on its optical fiber business and get back to profitability.
The Indian optical fiber maker is expected to finalise this strategy within the ongoing quarter. It has already started discussions with existing wireless equipment makers to sell its intellectual properties (IP) in the radio equipment and Wi-Fi domains.
“We have actually successfully built some of the products such as macro radios and on the Wi-Fi front. So our conversations are going on with various other partners who are in the wireless so that some of our assets or IP can be moved on to them,” Ankit Agarwal, managing director of STL, was quoted as saying by the Economic Times.
He said that divestment of the wireless business will improve STL’s profitability by up to around Rs 30-40 crores ($4-5 million) by Q4.
In September, STL offloaded its stake in UK’s Impact Data Solutions, which focuses on inside-data-center connectivity and containment solutions.
$20 billion business opportunity
The company is currently focusing on optical fiber-related opportunities in the US, UK and India to further grow its market share. Agarwal estimates the optical cable and interconnect space to be a $18 to $20 billion business opportunity globally. He also says the space has the potential to reach $25-$26 billion in the next few years.
“We are hardly at around $600 million, and that’s a tremendous opportunity for us to scale up,” Agarwal told the publication. “We have stated now our ambition is to be world top three in the optical space.”
The company reported one of its highest quarterly order intakes of Rs 3,200 crores ($390 million), which Agarwal said was on the back of its presence in Europe and the US.
He also added that ongoing 5G deployments by Indian telecom operators will also drive fiber deployment in the country, which in turn will further drive STL’s revenues. Indian telcos plan to spend between $1.5 billion to $2.5 billion to roll out around 2 million kilometres of fiber in next two to three years.
STL puts fiberization ‘front and center’
Globally, 5G, FTTH and data center rollouts are picking up pace, which is also driving strong optical demand, he said.
“Fiberization is going to be front and center in this decade of network creation, and STL is fully prepared to meet this demand,” Agarwal said, adding that the company has already made strategic investments for this demand cycle.
STL says it holds an 11% market share of the global optical fiber cable market (excluding China). In the US, it has almost reached 14% market share. Agarwal expects that growth to continue, with STL having signed a “multi year, multi million dollar contract with a leading broadband service provider”.
“We are also to see very strong investments and capex by operators, governments, as well as the hyperscale data center players,” he said. “All three are providing massive deployment plans.”