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Telcos to prop up Sterlite Tech's order size 20% in FY15

Monday, 16 June 2014 - 7:31am IST | Agency: dna

Sterlite technologies sees 20% growth in FY15 orderbook. Expects margins to be around 11-12% in current fiscal

Sterlite Technologies, the manufacturer of optical fibres and power transmission networks, which incurred loss at consolidated level and a fall in revenue in the last fiscal, expects nearly 20% growth in its orderbook position in 2014-15 on the back of fibre network expansion by the top-rung telecom firms like Reliance Jio, Vodafone and Airtel, Anand Agarwal, CEO, Sterlite Technologies, told dna"Every telecom player is increasingly looking at expanding their optical fibre network as the industry moves towards the data story. We are well placed to take advantage of this phenomenon as we have significantly expanded our network in past four years," Agarwal said.

Data average revenue per user (ARPU) of telecom companies have risen from 4-5% to 9-10%, but 90% of the telecom towers are yet to get connected with optical fibre in the country. Sterlite received a large scale order of national optical fibre network project in the last quarter (January-March) and have started deliveries of the same in the current quarter. The company's shares zoomed nearly 10% last Monday after Prime Minister Narendra Modi tweeted "Infrastructure should not only be about Highways but also about Information Highways! The way ahead lies in creating optical fibre networks."

The company's current order book as of May 1, including both optical fibre and power conductor operations, stands at Rs 2,600 crore, Agarwal said. The Pune-based company, which shares a common lineage with Vedanta Resources, has expanded its optical fibre cable network to 14 million kms in 2014 from around 8 million kms in 2010. The company aims to expand the network to 20 million kms in next three years with increasing penetration of broadband in India. Agarwal said that the company was also in talks with BSNL for its alternative defence network project which will be using optical fibre.

BSNL expects to hand over a new communication network for exclusive use by the armed forces by July 2015, after which the defence sector is expected to release 150 megahertz of telecom spectrum. The company's EBITDA in fourth quarter of last fiscal stood at Rs 55 crore against Rs 38 crore in December quarter and Rs 43 crore in same quarter last year, reflecting a 28% upward shift on year-on-year basis.

However, the company's consolidated earnings remained under pressure in last fiscal. The company's net revenue fell to Rs 2,501 crore from Rs 3,024 crore. The company registered a net loss of Rs 36 crore against a net profit of Rs 24 crore. The loss at net level on a consolidated basis is primarily on account of finance cost of infrastructure business, which is in capital deployment phase, the company said in an earnings concall. "Our interest cost at the standalone level is Rs 95 crore and Rs 180 crore at the consolidated level, and the difference of this interest cost is mostly attributable to the interest charge on infrastructure business," it said.

The company is building transmission lines under six different projects across the country. It has spent close to Rs 3,500 crore as capital expenditure and expects to progressively commission other lines of ENICL (East North Interconnection), BDTCL (Bhopal Dhule Transmission) and JTCL (Jabalpur transmission) projects, including the substations during the course of FY15. Most of this projects would start generating revenue this year.

In FY15, we should do progressive revenue addition to what we are currently doing, and FY16 should be close to the entire revenue generation for which these three projects is being executed at about Rs 570 crore," Agarwal said. The company hopes to get Ebitda margin of 11-12% in FY15 as against 10% in last fiscal.

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