Sterlite technologies (STL) has reported a net profit of Rs 44 crore in the July-September quarter after three consecutive quarters of losses. During the first quarter of FY23, the company posted a loss of Rs 20 crore. Consolidated revenues for the second quarter rose 17.24% year-on-year to Rs 1,768 crore while net profit was down 58.10% y-o-y to Rs 44 crore. STL reported an order book of Rs 3,200 crore, the highest in the last three and a half years.
The company said it had seen an improvement in cash flow from operations because of margin expansion and improvement in the working capital cycle in the optical business and ramp down of the wireless business. Realisation in the optic fibre cable segment improved up due to price increases and a reduction in logistics costs.
Ankit Agarwal, managing director, STL, said that the company was looking at exiting non-core business and improving the profitability of the company. The company would now focus on the optical network business (fibre, cable and optical interconnect products), global services of fibre rollout and network deployment, and digital technology solutions for the telecom and enterprise segment. STL has already exited from Impact Data Solutions, UK and was working on ramping down the loss-making wireless business, Agarwal said. This would result in losses being reduced by Rs 30-40 crore per quarter. The impact of these exits and ramp-down would become visible from Q4 onwards, Agarwal said.
The company would be able to increase annual revenues which were in the `5,000 crore range for the last three years to the Rs 7,000 crore-Rs 7,200 crore range with EBITDA of 20-22% for the optical business. As volumes on the optical side increase, they would see higher margins and improve profitability going ahead.
Agarwal said their large key accounts had announced CAPEX plans there was a four to five-year network build-out planned and if the fiber-to-home and 6G rollout was included then it would be a 10-year network rollout plan. India too would see an optical fibre spend of around $1.5-2 billion excluding the government’s Bharatnet fibre network roll-out plan.
The company had bagged contracts from British Telecom, UK, Vocus of Australia and DU Telecom, UAE and more orders were expected from the Indian 5G rollout. The fiberisation of telecom sites could lead to a tripling of demand for fiber km in the country from the current 20 million fibre km in the country.
The global optical business was currently worth $20 billion and growing and STL was to increase its market share. It currently has an 11% (ex-China) share of this business. Fibre capacity has increased from 30 to 50 million fibre km and cable from 18 to 33 million fibre km. Cable capacity is being further increased to 42 million fkm. STL’s new cable facility in the US was nearing completion and would be ready by the first half of FY24. All fibre from its Chinese manufacturing facilities was being used in-house to make cables.