Telecom Cables: Demand Exceeds Supply   

The large-scale deployment by carriers has given a big boost to the telecom

cable industry in India. Suddenly, all types of carriers in India from basic

service providers, cellular service providers, domestic long distance service

providers, ISPs, to utility service providers like the Gas Authority of India

Limited, Powergrid Corporation India Limited, and Indian Railways, have been

deploying telecom cables in large numbers in a number of locations.

The Indian telecom cable market is estimated at Rs 4,317.51 crore (excluding

the cables that have been imported) for 2000-01. In 1999-2000, the telecom cable

industry was valued at Rs 3,685.31crore (revised from the earlier figure of Rs

4,000 crore published in the July 2000 issue of Voice&Data. The excellent

performance of this industry can be attributed to the increase in plant

utilization, remunerative prices fixed by BSNL, and buoyancy in prices of raw

materials like copper and fiber.

The industry has achieved a growth of 17.15 percent in 2000-01. On the

Optical Fiber Cable (OFC) front, cable manufacturers have imported cables from

the worldwide market as there was a shortage in the Indian market. However, the

Jelly Filled Telecom Cable (JFTC) market was entirely taken care of by Indian

manufacturers.

On the one hand, Hindustan Cables was the number one player on the JFTC front

followed by Sterlite and Finolex. On the other hand, Sterlite Optical was the

number one on the OFC front followed by Aksh and Hindustan Cables.

The total OFC market, in terms of rkm, for 2000-01, was 2,55,000, which

catered to the Indian market as well as to the export market, whereas the total

JFTC market in India was estimated at 638 lakh cable kilometer (lckm).

Public sector units like BSNL and MTNL are still the bulk buyers of JFTC and

OFC cables in the country. But of late, the private players have begun to source

cables in a big way.

Seeing a huge opportunity in the telecom cable market, many new entrants like

Enigma, National Cables, Reliance Engineers, Uniflex, and West Coast have

started cable manufacturing setups in different regions of the country.

Despite the huge demand in the fiber cable market, the industry is facing a

shortage crisis in raw material. So on the OFC front, companies have started

doing backward integration by setting up preform and fiber drawing factories.

The demand for fibers outstripped the supply position and the shortage of

fiber in the worldwide and India market led to an increase in the cost of

optical fiber cable and fiber in the market. The cost of drawn fiber reached a

peak of Rs 5,500 per km and is presently hovering at around Rs 4,700 per km.

Cost of Cable

In the last fiscal, the cost per lckm of JFTC cable was around Rs 7.35 crore.

This year, the price of JFTC cable will see a drop of around 8 to 10 percent as

cable manufacturers have to absorb 6 percent of the sales tax and 2 percent

octroi charges.

Cables Deployed

The largest buyer of telecom cable in the country, BSNL, had a plan to deploy

1,00,000 rkm of OFC in the last fiscal. But due to a shortage of OFC in the

world market as well as in the Indian market, the company was able to deploy

only 54,000 rkm of OFC.

BSNL buys around 90 percent of the total JFTC demand in the country. On the

JFTC front, BSNL had a target to deploy 583 lckm which they more or less

fulfilled. The private service providers deployed around 55 lckm of JFTC in the

country and leading the race was Bharti and Tata Teleservices. Companies like

Spectranet, Hathway, and IN cable also deployed OFC in large numbers.

In the last fiscal, OFC was also exported to different countries.

Future Plans

But this year, BSNL is planning to go for distributed switching technology

that will help in optimizing on the JFTC cable network. The plan outlay for BSNL

in 2001-02 is to deploy 473 lckm of JFTC and if possible, to cut down on lckm.

This translates to a drop of around 19 percent.

Since it is warding-off competition from Reliance, BSNL is very aggressive on

the infrastructure side. The company has already given an order worth 441 lckm

of JFTC cable in this fiscal. MTNL has also come with a tender for 17 lckm in

this fiscal. On the OFC front, the company has floated a tender for 100,000 rkm.

This year, there will be an increased requirement of telecom cable from

Reliance Infocom, Hughes Tele.com, Bharti, Tata Teleservices, Shyam Telelink,

and HFCL Infotel.

This year, the private basic service providers will deploy around 100 lckm of

PIJF cables and around 30,000 rkm of OFC in the country whereas BSNL is planning

to deploy 126,000 rkm, an increase of 26 percent from the previous year’s

planning.

But in terms of actual deployment, the growth translates to a whopping

133 percent.

Cable Companies in India

Cable

Companies in India Rank Company JFTC (in lckm) OFC (in rkm) Revenue (in Rs

crore) 1 Hindustan Cables 90 40,000 974 2 Sterlite Optical 52 96,296 921.72 3 Vindhya Telelinks 42 4,000 368 4 Finolex Cables 50.87 – 311.74 5 RPG Cables 26 2,510 248.63 6 Usha Beltron 33.5 – 216 7 Birla Ericsson 19.5 4,800 198 8 Gujarat Telephones NA – 184.96 9 Paramount Cables 20.2 – 163.01 10 Aksh Optifiber – 92,379 142.54 11 Bhagyanagar Metals 17.38 – 127.68 12 Tamil Nadu Telecom 9.46 7,769 113 13 Concepta 13 – 106 14 Delton Cables NA – 83.45 15 Surana Telecom 7.09 2,046.73 65.08 16 HFCL NA NA 21.11 17 Optel NA NA 18.7 18 Others NA NA 49.89

NA stands for Not Available

LCKM stands for Lakh Cable Kilometer

RKM stands for Route Kilometer