Aksh Optifibre Ltd, a manufacturer of OFC and fibre reinforced plastic rods looking to transform into a services player, has its eyes set on the IPTV.
MUMBAI: Aksh Optifibre Ltd, a manufacturer of optic fibre cables (OFC) and fibre reinforced plastic rods looking to transform into a services player, has its eyes set on the internet protocol television (IPTV) and voice over internet protocol (VoIP) space.
The company is in the fray for the rollout of VoIP services by Bharat Sanchar Nigam Ltd (BSNL) nationally. The bids are likely to be opened by the month end, and if selected, the company could see its addressable marketsize going up about seven-fold.
Kailash Chaudhary, managing director, Aksh Optifibre said, “The scale and opportunity is huge. BSNL plans to have 20 million broadband subscribers by 2010 against 3 million of Mahanagar Telephone Nigam (MTNL). Although we don’t know what number of these subscribers would opt for IPTV or VoIP, it is still a huge opportunity.”
Aksh already has a mandate from MTNL to provide IPTV and VoIP services to its broadband customers in Mumbai and Delhi. Aksh is aiming for 0.5 million IPTV and 0.4 million VoIP users in these cities in four years. While it has rolled out both VoIP and IPTV services in Delhi, in Mumbai, only VoIP service has been launched and IPTV is expected to be launched by end-February.
BSNL has divided the country into two zones for offering VoIP services. Two players in each zone would be selected to roll out the services. Besides Aksh, Sterlite Optical, Indus Online and Smart Broadband are in the fray.
Though Aksh hasn’t yet won the tender, the stock price has begun reflecting the upside. It has appreciated almost 50% over the last one month to Rs 86.
In order to fulfill the MTNL order, Aksh is raising $40 million through issue of global depository receipts (GDRs) and foreign currency convertible bonds (FCCBs). Of this, $23 million would go for IPTV and $8 million for VoIP infrastructure. He is also investing $7 million in a set top box (STB) manufacturing facility and expanding his optical fibre capacity.
“We haven’t yet disclosed fundraising plans if we happen to win the BSNL order. Although the scope of work and opportunity is 7-8 times larger than MTNL’s, the cost and investment will not be in the same proportion. We have created head-end infrastructure which we don’t need to duplicate. Hence, subsequent rollout won’t be that expensive,” he said.
Overcapacity and subsequent weakening of OFC prices had forced Aksh into the red sometime ago. Having turned around successfully, it is now looking at services for topline and bottomline growth.
“According to a research house, by 2009-10, we will earn 60-70% of our revenues and 80% of our Ebidta (operating profit) from services,” Chaudhury said.
He said the demand for OFCs was quite strong, with most manufacturers sold out for the next 6-8 months. Aksh is also expanding its OFC capacity by 30-40% to meet the increased demand, he said.
In view of all this, the company was confident of maintaining its last three quarters’ growth rate of 25% year-on-year, he added.
g_rabin@dnaindia.net
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