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The previous fiscal proved to be the golden year for the telecom cable industry, which was waiting for the much-desired respite. The industry, which was experiencing steep declines over the past few years, recorded colossal growth in FY 2004–05. It recorded an all-time high revenue of Rs 990 crore-nearly 115 percent growth over FY 2003–04.

In the past when wireless telephony had created a lull in the market, it was broadband and copper wires that got the market going once again. Telcos' aggressive expansion plans ofreaching out further into the B and C class cities gave the growth impetus. Of the total 990 crore market, jelly-filled telephone cables (JFTC) was approximately valued at Rs 675 crore and optic fibre cables (OFC) at Rs 315 crore.

The Trends
The bulk growth in the market came from purchases of OFCs and copper cables. In India, BSNL created the bulk of the demand through its bulk orders. The copper cables segment had been especially flat in terms of activity for some time. There was high demand for cables for access technologies by Bharti and BSNL. Starting in 2004–05 the broadband roll out plans are continuing to add the big bucks. All telcos in the country be it a BSNL/MTNL, Reliance, Tata, or Bharti are all very aggressively rolling out broadband for converged services. The focus is not only on services but also on access and value-added services.

With BSNL shifting its focus back to expansion, the copper cables sales has shot up.

Broadband is the most sought-after industry for large deals and bulk purchases as it is expected to grow by an overall 45 percent and give good business to the cable providers.

There have been repeat orders for last-mile connectivity, and sales have been growing. Another important aspect is the stabilization of the till-now plummeting prices of cables. Until recently, it was difficult to even participate in tenders as the prices were too unrealistic. But with consolidation of the market and raw material prices too stabilizing, the market is seeing some competitive pricing.

Applications and content are clearly driving the bandwidth market. Though wireless had been posing threat to the industry, it has been recognized that there is a need for both. As converged content would need high bandwidth capacity the cables also need to be closer to the subscriber. This has resulted in the last-mile connectivity beyond metros.

The solid JFTC is the most common cable presently used in the subscriber access landline telecom network (telephone lines connection to exchanges and users) in India. The industry is fraught with surplus capacity, relative to demand, and mounting competition emanating from alternative CDMA-based WLL technology.

The deployment of OFC has more recently made inroads into subscriber access with fiber-to-the-home (FTTH) networks, as well as cable TV and other applications. This has happened due to the broadband initiatives undertaken by public and private sector operators. Apart from the incumbents BSNL and MTNL, the new service and infrastructure providers in private sector, including Reliance, Bharti, Tata Teleservices, Railtel, Gailtel, Shyam, and Power Grid continued to account for bulk of OFC deployment in India.

Market Realities
The consumption of JFTC was expected to decline due to the increasing telephone density and growing shift in preference to wireless technology in access networks, in India. But FY 2004–05 registered sizeable sales for the JFTC. As against opting for OFCs for broadband rollout plans, the BSNL's strategy of endorsing ADSL modems as a means to its broadband connectivity may impact demand of OFC in access network and home applications. On the positive side, the possibility is that there will be good demand for both the access technologies.

Relaxation in the policy framework by the government for merger and acquisition or allowing mutual sharing of infrastructure by the service providers could ultimately create a tight demand and heated competition for telecom cables. The communication cables business is expected to grow to satisfactory levels in the coming years, though it is under constraint today. The high-end communication cables like LAN cables, co-axial cables do the job of a specialist within the defined periphery and parameters. 

State of Affairs
Sterlite Optical had nearly 200 crore of revenue from copper cables alone, out of its overall revenue of Rs 402 crore. Its OFC business grew by 6 percent and business, both domestic and overseas, saw a significant growth. The company had made a foray into the structured cabling market since March 2005 to be an end-to-end service provider for the cable requirements. This has addressed the missing link in its otherwise complete portfolio for telecom needs.

Finolex's main product offerings are JFTC, OFC, LAN cables and components, switchboard cables, co-axial cables and V-SAT cables. Now it is focusing on developing new generation high-end communication cables without losing the strength of being a low-cost traditional telecommunication cables manufacturer. However, the company is aware of the opportunities for sales of both these varieties of communication cables in the under-developed and developed parts of the world and is accordingly making conscious efforts to broaden export markets for communication cables.

Finolex witnessed a slight dip in its communication cables segment in the previous year. BSNL was its major customer of the JFTCs; it won nearly 10 percent of the overall tender. And it has been regularly receiving export orders for supply of foam skin JFTCs. It is also aggressively tapping new markets overseas. Similarly, its OFC segment would also grow. With the entertainment industry making a stride, the demand of co-axial cables is expected to be strong. It expects the sales of LAN cables and switchboard cables to grow above industry rates in the current year. The communications cable business constituted 17 percent and grew 22 percent in 2005, to 150 crore.

Vindhya Telelinks and Birla Ericsson too saw significant growth of over 50 percent in their revenues compared to FY 2004–05. Birla Ericsson portfolio covers OFCs and polyethylene-insulated JFTC.

Minu Sirsalewale