Union Budget 2017-18: Sterlite Tech says Bharat Net push could help it diversify

The Budget’s push to the government’s Bharat Net initiative, which aims to spread broadband connectivity in rural areas, presents plenty of opportunity to Sterlite Tech, said Anupam Jindal, the company’s Chief Financial Officer.

Speaking to CNBC-TV18, Jindal said that Sterlite Tech supplies 40 percent of the fibre optic cables for the project. He said the doubling of the allocation to Bharat Net, which forms the backbone of the Digital India initiative, to Rs 10,000 crore would result in larger supply volumes.

Stating that the increased allocation would help expedite broadband connectivity in rural areas, he said that Sterlite Tech was also exploring the possibility of not just supplying the cables, but also laying them out, a project which he said could fetch the company three to four times more revenue.Sterlite Tech had last month posted a 63 percent jump in consolidated net profit at Rs 49 crore in the third quarter ended December 31, 2016.

Below is the verbatim transcript of Anupam Jindal’s interview to Sumaira Abidi and Prashant Nair on CNBC-TV18.Sumaira: To begin with, can you tell us what was the allocation to Bharat Net last year so we know how much it has gone up by and how much of optic fibre cable would this actually help layout?A: It is a very positive move in the sense that last year this allocation would have been in the range of about Rs 5,000-5,500 crore and from that perspective, it has been doubled up to Rs 10,000 crore. It will help expedite this role out of broadband program for connecting the rural broadband. Prashant: Was the Rs 5,500 crore spent last year or there will be some spillover into FY18? A: No, it was spent last year. Prashant: How was it spent? Could you give us some details, where did the bulk of that money go, which company, private sector, public sector, etc.? A: This money is split in terms of fibre cables and component and the laying out, so, overall BSNL, through BBNL is coordinating the entire rollout program and in this current program Sterlite is purely playing a cable supply role, in the past allocation so far. We have got almost like 40 percent market share in the country for fibre in the country. While we have global presence as well, but in the country we have almost like 40 percent market share and similar share we had in the past rollout programs. Going forward, the allocation is doubling up, we are looking at volume from the same will go up. The government is also looking at unlike the past implementation where BBNL and BSNL, they used to have buyout of the fibre cable separately and laying out the rollout separately, they may look at integrated approach where they can simply look at somebody rolling out the program in totality as the turnkey supply and execution. Sterlite being an integrated solution provider can look at that opportunity. So, from our perspective, opportunity can actually multiply, not just being the cable supplier, but also look at this opportunity more holistically in a large volume. Sumaira: So if this integrated approach were to come in, what could be the possible size of opportunity for you? A: We just need to look at the numbers, how the opportunity will be spread out. Sumaira: What I mean is how different is it from just being the optic fiber cable supplier? A: From our perspective, if it gets converted into an integrated opportunity it can be at least three to four times more than what we supply pure as cable. So, from that perspective, revenue size could be four times of a normal fiber cable supply.