The company believes that from investors’ point of view, the move is positive as the entity will have a better financial profile after the demerger and reflect better return ratios, impacted by the capital expenditure intensive power business.
Sterlite Tech has a quarterly revenue run rate of Rs 500 crore and its telecom business is estimated to continue growing at 30 per cent. During the nine months ended December, the company’s reported a year-over-year growth of 32 per cent.
Sterlite Technologies is a vertically integrated telecom equipment company and looking at partaking in the massive infrastructure rollout, which it expects will help a billion plus Indians start accessing high-speed data services. Currently, only five per cent of India is estimated to be using broadband services (speeds upwards of five megabits per second) and over the next few years, Rs 1 lakh crore will be spent on broadband infrastructure by both companies and the government.
In addition to building broadband networks and laying the fibre lines, Sterlite is also eyeing opportunities from Smart City project as more and more cities look at digital solutions to provide utility services to citizens. On the road ahead, Anand Agarwal, chief executive officer, said, “This restructuring underscores our commitment to India’s broadband transformation. Cities are today realising they need to create infrastructure for broadband networks. We are laying the fibre at Jaipur and Gandhinagar and even developing.”
For the smart cities, the company has a host of solutions, including both applications and software, to deliver services. Most cities, currently, do not have the infrastructure layer (fibre network), transmission networks but are planning to build so that smart solutions can be provided digitally. Sterlite has capabilities of designing and setting up these networks.
While telecom service providers might continue to play the dominant part, smart cities and the government’s rural broadband play under the Bharat Net plan will also provide opportunities.