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Despite substantial increase in fibre optic cables demand, most of the companies have registered a negative growth rate due to a significant drop in copper cable deployment. As per our estimates, the industry showed a negative growth rate of 34%. Demand for fibre optic cables showed an increase in demand in FY '06-07 to 3.1 mn km of cabled optical fiber. This represents a y-o-y growth of about 33% in FY '06-07 over FY '05-06. But, copper cable demand plummeted by more than 80%. One of the main reasons could be nearly 100% increase in copper prices over the last one year.

There is also an increase in adoption of fiber-based networks by the cable TV segment, multi-service operators (MSOs) and e-Governance state initiatives. Reliance communications spent $1.5 bn on network expansion last fiscal, and has already covered 7,500 towns in the current fiscal year. Bharti added about 8,500 kms of fibre optic to its network in fiscal FY '06-07. Copper cables laid by telecom companies, which were considered obsolete, redundant and expensive in the wireless world, have got a fresh lease of life with the launch of broadband services in the country. Broadband services have sparked off a fresh interest in landline phones, with private operators pushing demand for copper cables. In FY '06-07, there was a noted decrease in the purchase of copper telecom cables in India, from 170 lakh km in FY '05-06 to mere 21 lakh km this year. The industry is anticipated to show a significant revival in FY '07-08, with tenders for about 85 lakh km announced recently.

Almost all the major telecom players have mega investment plans, and Reliance has already committed to spend approximately $2.5 bn investment going into network expansion. This includes the wireless expansion to more towns, but at the same time significant portion will also go toward broadband infrastructure expansion. This will provide a big push for the industry. Bharti, Idea, and Vodafone have also announced similar plans, and are expected to invest 9,000 crore each. On the PSU front, BSNL has plans to invest Rs 28,000 crore.

Industry Report
In the telecom cable space, Sterlites, which are the market leaders, showed a negative growth, but managed to maintain their lead, as other players also could not maintain a positive growth. They earned net revenues of Rs 414 crore, FY '06-07, compared with net revenues of Rs 547 crore in the corresponding period last year. A significant delay and volume drop in copper cable purchases by telcos, most notably BSNL and MTNL, led to a drop in revenues for copper cables business during FY '06-07 as compared with FY '05-06. Finolex jumped from third position to the second, despite their negative growth. There was only a slight negative growth of 7% as compared to the overall industry showing, 40% growth. Vindhya Telelinks slipped to fifth position compared to last year when they where at the second due to a 68% in revenues. Only telcom manufacturer who showed a positive growth were RPG Cables that registered a growth of 25%, but still they could not figure in our top six list. Andrew Telecom expanded their cable manufacturing facility in Goa.

Nilabh Jha
nilabhj@cybermedia.com

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