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
RankCompanyJFTC (in lckm)OFC (in rkm)Revenue (in Rs
crore)
1Hindustan Cables9040,000974
2Sterlite Optical5296,296921.72
3Vindhya Telelinks424,000368
4Finolex Cables50.87311.74
5RPG Cables262,510248.63
6Usha Beltron33.5216
7Birla Ericsson19.54,800198
8Gujarat TelephonesNA184.96
9Paramount Cables20.2163.01
10Aksh Optifiber92,379142.54
11Bhagyanagar Metals17.38127.68
12Tamil Nadu Telecom9.467,769113
13Concepta13106
14Delton CablesNA83.45
15Surana Telecom7.092,046.7365.08
16HFCLNANA21.11
17OptelNANA18.7
18OthersNANA49.89

NA stands for Not Available

LCKM stands for Lakh Cable Kilometer

RKM stands for Route Kilometer

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