"Sterlite and Alcatel have signed an MoU for forming a strategic alliance toprovide turnkey networking solutions which will be extended to an equitypartnership after the telecom company is formed. Though the exact equitystructure is yet to be worked out, Alcatel may be offered 50 per cent in thenew venture," Sterlite director (telecom) Ashok T Panjwani told TheFinancial Express.

Alcatel, with a turnover of $25 billion, has operations spread over 130countries around the world. Sterlite's telecom division has reported aturnover of Rs 1,000 crore during the last fiscal. It is targeting aturnover of Rs 2,000 crore by fiscal 2001-02.

Sterlite has already supplied over 50,000 kms of optical fibre cables andmore than 70 per cent of the installed cables in the India Railway network.Alcatel, a leading supplier of optical network solutions world wide, buildsnext generation networks besides delivering integrated end-to-end voice anddata solutions to carriers and enterprises.

Panjwani said the association will rope in more strategic partners -- ifrequired -- to meet the telecom requirements of the Indian Railways.The two have decided to join hands even before the completion of thedemerger considering the enormous opportunities available in the telecomsolutions business in India. To start with, the partnership will offerconsultancy to the Indian railways to develop a multi-media network alongroutes measuring around 60,000 kms.

The alliance will gradually venture out into internet applications,telephony and video conferencing. Realisations for the optical fibrebusiness has improved on surge in demand in the ASEAN region. Whilejelly-filled telephone cables sales volumes of Sterlite grew 15 per centduring the second quarter ended December 31, 1999, optical fibre cablessales volumes registered a 54 per cent growth in sales during the sameperiod. Sterlite has already set the ball rolling for the demerger byappointing consultant Arthur Andersen to work out the swap ratio. Thecompany has created an internal cell to prepare the groundwork beforeapproaching the high court to get its approval.

Along with the demerger, the company has announced its intention to mergeMadras Aluminium Company (Malco) with itself. As part of the restructuringexercise, Sterlite will also divest its stake in the paper project which hasalready been spun off into a separate subsidiary. Andersen will be given themandate for finding a partner for the paper subsidiary.

The entire recast process was initiated following a thinking among theSterlite top brass that the company's inherent strengths are not reflectedin the market capitalisation.

Non-ferrous metals and telecommunuications contributed 60.3 per cent and39.7 per cent of the company's turnover during 1998-99. Sterlite's telecomfacility is located at Aurangabad in Maharashtra.