STL looks at 5G, FTTH, data centers as multi-year opportunity

In an interview with CNBC-TV18, Ankit Agarwal, MD, Sterlite Technologies, said that he sees multi-year opportunity linked to 5G, fibre-to-home and data centers.

He said, ” I think, definitely the opportunity as we shared is multi-year network build-out linked to 5G, fiber-to-home as well as data centers. I think, clearly the market will grow in the range of 8-10 percent.”

He explained that there’s strong demand coming in from markets such as the US, Europe and Australia. The company is sending cables and interconnect solutions via containers to these markets and as a result, there has been some impact on its prices. Additionally, higher oil prices have also impacted costs, he shared. Agarwal said that he sees some of these costs being passed on to customers in the next 3-6 months.

“With our manufacturing base, some portion of which is in India and some global, a lot of our cables particularly and our interconnect solutions are now getting sent through containers and some of the impact of that has come through in terms of our cost increases. Also, with oil prices continuing to rise and in the USD 100/ barrel range, that is also impacting some of our raw material costs,” he explained.

On margin, he shared that it is likely to get back to the guided band of 16-18 percent in the second half of next year. “The current guidance we had shared of 16-18 percent, we do believe that if we account for provisions as a one-off, we will move back into that range broadly in the second half of next year,” Agarwal said.

On revenue, he said that the Russia-Ukraine war won’t impact them. He said, “From a sales perspective, it will not impact us, its practically negligible sales for us in these regions, but the overarching impact in terms of oil prices or certain raw materials going up is something that we do have a diverse supply base, but some of our raw materials which are linked to the oil prices, to that extent we do feel there are some temporary cost increases.”

On Bharat Net Project, he said, “The model is getting tweaked in terms of how much of the capex does the government spent upfront and what are the requirements from the telecom operators or the service providers ultimately leading to the usage of the network. So that’s where the work is going on and we are hopeful that in the next 1-2 quarters the model will get frozen and some positive developments will happen in this space.”

For the entire interview, watch the accompanying video:

CNBC-TV18