Deepak Chhabria, Executive Chairman, Finolex Cables Limited
The Indian telecom sector is undergoing a transformation due to the surge in mobile data usage and growing smartphone adoption. This increase in data demand has made it imperative for operators to set up high capacity optic fibre cable (OFC) networks, both for the last mile and backhaul. The adoption of new technologies such as 5G and internet of things (IoT) is going to further fuel the demand for fibre in the country. In an interview with tele.net, Deepak Chhabria, executive chairman, Finolex Cables Limited, talks about the company’s journey in the telecom space, its key focus areas and the way forward…
How has the OFC market for the telecom sector evolved over time? What are the key demand drivers?
From meeting the requirements of government-owned companies such as Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) to catering to more than 10 telecom operators after 2G licences were issued, the OFC market in India has witnessed a steady growth. In recent years, there has been an exponential increase in the mobile subscriber base, which requires OFC for carrying voice, data and video.
The fiberisation opportunity is huge in India as the country’s per capita fibre km (FKM) stands at just 0.09 at present as compared to 0.89 FKM in China and 1.35 FKM in Japan. Further, as per World Bank statistics, the increase in mobile and broadband penetration in developing countries increases the per capita GDP by 0.81 per cent and 1.38 per cent respectively.
Key demand drivers
The government, through its ambitious BharatNet project, is emphasising rural broadband connectivity. The provision of services like e-school and e-health will require OFC connectivity. Further, a special demand is coming from the fibre-to-the-home (FTTH) sector owing to the increasing work-from-home and school-from-home culture post-Covid-19.
Export opportunities due to anti-Chinese sentiment
5G will be the key demand driver for an enhanced experience with exponential speeds, machine-to-machine communication, artificial intelligence (AI), IoT, transportation with driverless cars, and a lot of data requirement from online gaming, movies and education, etc.
How has Finolex’s journey been in the telecom cable space?
Finolex has been a pioneer in the cable industry. We were the first private sector company to manufacture and supply jelly-filled telecom cable to BSNL (earlier, a part of the Department of Telecommunications). When the demand for data forced the telecom sector to shift from copper to optical fibre, Finolex formed a joint venture with AT&T to manufacture OFC and started operations in Pune in 1997.
What are Finolex’s focus areas in the telecom space? What are the key business highlights?
On the product side, Finolex has a full range of cables used in the telecom space. We are into the manufacturing and marketing of OFC, jelly-filled telephone cables, local area network (LAN) cables and coaxial cables.
Backward integration for various critical raw materials is one of our key business highlights. For example, we are backward integrated into manufacturing of optical fibre, fibre reinforced polymer rods, continuous casting copper rods and poly vinyl chloride compounds. This helps ensure good quality of raw materials, avoid supply disruptions and provide cost-effective products to customers.
How has the Covid-19 pandemic impacted the OFC market in India?
The Covid-19 pandemic initially disrupted project execution primarily due to the problem of migrant labourer. It also affected the supply side for the demand of the telecom sector. There were various logistical disruptions, which affected timely deliveries. On the positive side, an emphasis on work-from-home by businesses and learn-from-home by schools increased the need for wired broadband connections by individual households. This has led various telecom operators to shift focus from enterprise solutions to the FTTH opportunity.
How have your company’s operations been impacted due to the coronavirus outbreak? What steps have you taken to normalise them?
There were small disruptions initially due to the unprecedented lockdown. However, gradually things started normalising and today we are running close to our pre-Covid operation levels. In the initial period of the lockdown, we started using various platforms for online meetings between heads of departments to plan and chalk out strategies. A committee was formed to prepare, monitor and continuously update the standard operating procedures required for safe operations, based on the guidelines issued by the central and state governments. As our manufacturing plants are in various states, a lot of coordination was required due to different guidelines issued by different states at different times.
We have created a safety awareness drive for our employees. The company has shown its commitment to the employees by paying full salaries during the lockdown and not reducing their salaries even post opening up due to difficult market conditions. The employees have acknowledged and contributed back to the growth of the company by increasing their productivity.
What are some of the telecom-related key projects that the company is working on?
We are proud to be associated with the Gujarat government’s Gujarat Fibre Grid Network Limited, supplying fibre optic ribbon cables. We are also supplying fibre optic ribbon cables to Bharat Broadband Nigam Limited through BSNL under BharatNet Phase II. We are the sole supplier of fibre optic cables for the Indian Navy’s Network for Spectrum Project being implemented by Telecom Consultants of India Limited.
How are you leveraging opportunities under government initiatives such as Digital India, Make in India, BharatNet and the Smart Cities Mission?
Our key focus area is the domestic Indian market and we are an approved supplier and one of the reliable partners for all the private telecom companies, supplying a whole spectrum of telecom cables. For the Smart Cities Mission and BharatNet, we are supplying a variety of OFC designs to the implementation agencies.
We have also expanded our optical fibre ribbon cable-making capacities. We have added additional capacities to meet the growing needs of FTTH cables. We have also expanded the capacities of LAN cable and coaxial cable in line with Make in India, to reduce the country’s dependency on poor quality Chinese imports.
What is your outlook for the Indian telecom OFC market over the next two to three years?
On August 15, 2020, the prime minister announced that optical fibre connectivity will be provided to every village in India within 1,000 days. To achieve this objective, OFC cable needs to be procured and laid at much faster rates than the current deployment speeds.
With an increase in global 5G roll-out, Indian telecom operators will also need to build robust OFC infrastructure for meeting 5G requirements. This will increase the demand by three to four times from the current OFC requirement. The majority of this demand will come from the deployment of a large number of small cellular towers.
FTTH demand will also continue to grow in the future as India is lagging behind other Asian countries. We expect OFC telecom to clock more than a double-digit growth in the next two to three years.
What are Finolex’s growth and investment plans for the telecom sector in the future?
The telecom sector is one of the key business areas of Finolex Cables. We will continue to invest in our capacity expansions of OFC, LAN cables and coaxial cables. We are also expanding to meet our growing demand for optical fibre by investing in and expanding our optical fibre drawing capacities.
