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Despite the tremendous growth in the overall telecom sector, the telecom cable market has failed to keep up the momentum it showed during the last fiscal. According to VOICE&DATA100 research, most of the players have shown negative growth during this period.

In India, Sterlite Technologies (formerly, Sterlite Optical Technologies) continues to be a preferred supplier for most of the buyers of fiber optic cables and copper telecom cables, such as BSNL, Reliance Communications, Tata Teleservices, Bharti Airtel, MTNL, Indian Railways as well as utilities in power, oil and gas sectors.

The company has retained its top position and garnered Rs 394 crore revenue for FY 2008-09.

Its international sales currently account for 25% of its net revenues.The company has witnessed significant growth in its export revenues and services. Some key projects include a contract from BSNL for supply of India's first high density 288F ribbon fiber optic cable. It also bagged a contract for installation of an OSS/BSS for the Metro Ethernet network that will cater to 2,00,000 broadband subscribers in Mumbai. Similarly, Finolex also bagged some domestic ribbon fiber orders.

Other major players which ruled the charts were UM Cables, Finolex, Birla Ericsson, Aksh Optifibre, and Paramount Cables. Aksh Optifibre has approved a scheme of arrangement, whereby it was decided that from FY 2009-10, the manufacturing division of the company-engaged in manufacturing of optical fiber, optical fiber cable and FRP rods-will be hived off into Aksh Technologies, a 100% subsidiary of the company.

Also, it is planning to set up an FRP plant at Kandla in Gujarat. The plant, which will be operational by the middle of this year, will increase Aksh's annual production capacity to 10 lakh km from the existing 6.5 lakh km.

Similarly, in order to increase its capacity, RPG Cables has completed the expansion work at its Mysore plant in Karnataka. The plant will have a capacity to manufacture 10,000 kms of insulated wires and cables of various sizes. The company has also secured an order worth $25 mn from Afghanistan. Under this, the company will supply medium and low voltage cables of various sizes for the Kabul Distribution Enhancement Project.

During the year, Sterlite was granted three patents in the US and India, adding to its existing basket of thirteen patents granted in previous years.

Its projects are underway to double the annual optical fiber manufacturing capacity to 12 mn fkm, triple fiber optic cable capacity to 6 mn fkm and enhance power conductor capacity to 1,60,000 metric tonnes.

Market Twisters
In FY 2008-09 the demand for optical fiber market was led by China followed by the US, Japan, and India. During this period, India was the fourth largest consumer in the world with an approximate demand of 8 mn km. The market size in copper is estimated to be around 60 lakh km this year. The key factors, which drove the global market, were local telecom applications, FTTx, metropolitan rings, business access, and cellular backhaul. FTTx represented 33% of the total optical fiber market.

At present, FTTH deployment is on the priority list of a majority of service providers. Notably, BSNL, the state-run incumbent, is planning to implement GPON-FTTH networks at twenty-five sites across the country. Through these networks, BSNL is targeting to provide high speed Internet, VoIP, IPTV solutions and other value added services to nearly 2 mn subscribers. Several other prominent pan India operators may also join the FTTH bandwagon. Besides operators, real estate developers are analyzing the benefits of this technology.

Business Halts
While companies like Sterlite is banking heavily on exports and hence, has managed to maintain its margins, there are others who have not been able to compete owing to price margins. For instance, Vindhya Telelinks refused a Rs 19 crore order because of similar reasons.

Over the past few years, there has been a significant slump in demand from the traditional buyers of cables, mainly from the government sectors. The reason being, they chose to either optimize the bandwidth capacity utilization of their existing network or experiment with wireless technologies to achieve their subscriber targets in the shortest time.

In addition to this, issues such as lack of support in exporting cables, delay in implementation of projects, and growing competition are creating a difficult road for small and new players to grow.

According to VOICE&DATA100 research, some of the big companies are keeping price at such a low level, that the relatively small companies are not even able to make any significant margins. The increase in raw materials could not be countered by an equal increase in selling prices as a bulk of sales are for BSNL/MTNL, under fixed price.

Outlook
Increased usage of broadband, both in cities and underdeveloped areas, are the key growth engines for optical fiber in the country. Most of the existing operators are going ahead with their expansion plans.

Also, year 2009-10 seems to be a year of excitement because of the entry of new players like Swan, Unitech Wireless, and Sistema Shyam Teleservices. These players may plan to share the infrastructure initially. However, as the number of subscribers will build on their network, laying their own network would certainly become a priority for most of them.

These developments indicate that the fiber demand size will remain at around 8 mn km for the FY 2009-10 and could grow substantially in the next couple of years. While thumping market opportunities is being predicted for the fiber optical cables, the copper cable market is expected to remain sluggish. It is imperative to imbibe learnings from the global market on how communications infrastructure can assist in speeding up economic growth.

Jatinder Singh
jatinders@cybermedia.co.in