Telecom industry is one of the direct beneficiaries of the ongoing era of technological advancement. Mr. Harsh Pagay, Executive President of Optical Fiber & Optical Fiber Cable, HFCL Limited, shares with Wire & Cable India the current state of Indian and global telecom industry, demand trends, and upcoming opportunities. He also divulged information about HFCL’s capex investments for increasing manufacturing capacity of OFC and fiber cables, to 35.08 mn fkm and 22 mn fkm per annum respectively. The company is also targeting to double its exports to INR 750 crore by FY23.
Wire & Cable India (WCI): Please take us through the new/innovative product launches at your company.
Harsh Pagay (HP): HFCL has emerged as a technology-driven enterprise that has placed a significant emphasis on developing innovative and futuristic technology products. As a market leader in Optical Fiber Cables (OFC) manufacturing in India, we are developing various types of next-generation OFC for different applications and installations like underground cables, aerial cables, micro cables, mini cables, high fiber count ribbon cables, FTTH cables, micro module cables, blown fibers, etc. We offer multiple variants of low-diameter micro cables with higher fiber densities, in optimum size, and customized according to the consumer’s needs.
With the advent of 5G, there is an uptick in demand for greater bandwidth, lower latency, and the quantum of data generation and transmission, resulting in an unprecedented rise of data centers in India and abroad, and hence contributing in the rise of data center cables. To meet the growing demand, HFCL offers compact design high-fiber-count cable products that are easy for installations/terminations and consume less duct space. The currently available optic fiber counts in the industry are as high as 6,912, and we are now trying to develop an entire range of these products with unique propositions for packaging them with our connectivity solutions. Our new cable designs are a technological breakthrough that allows packing more fiber into a cable and lowering the diameter of cables without compromising the performance of cables in the field. Many of our microcable designs are unique and the first of their kind in terms of cable dimensions and bending performance, and they are duly tested and qualified for the cable blowing test by international agencies.
India is ahead of the US and Europe in the rollout of 5G infrastructure. In fact, leading Indian telecom operators like Jio and Bharti Airtel have been able to roll out their 5G services in 225 and 65 cities, respectively, by the end of January 2023. As the market for products that support 5G networks is growing rapidly, we took this opportune time and introduced various next-generation products and solutions, including the world’s First Open Source Wi-Fi 7 access points, 5G 8T8R macro radio units, our 5G lab-as-a-service, and 5G outdoor small cell product development. We are confident that our world-class innovations will further aid and accelerate 5G adoption and network upgrades, both in India and globally.
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WCI: Has there been any recent development in terms of capacity expansion, product development, or technological innovations?
HP: There has been multi-fold growth in the demand for fiberization in India, led by the launch of 5G, penetration of FTTH in the country, and the ongoing BharatNet and NHAI initiatives launched by the government. As per a report by CRISIL, 5G technology dictates fiberization levels of over 70 percent, versus 25–30 percent levels at present. CRISIL estimates that if each player were to reach this level individually, Indian telcos may need investments of up to INR 1,00,000 crore only in laying fiber networks over the next 2-3 years. Further, according to Fortune Business Insights, the global fiber optics market size is expected to reach USD 9.73 billion by 2027, exhibiting a CAGR of 10.3 percent during the forecast period.
As one of the largest suppliers of OFC in India, we are expanding our consolidated OFC manufacturing capacities, our existing capacity is 25.08 mn fkm and its going to increase further by 10mn fkm and we are expanding our fiber manufacturing capacities from 10 mn fkm to 22 mn fkm per annum. This huge capex investment will be focused on next-generation products, and this expansion will help us further develop innovative network solutions. As mentioned earlier, we are also manufacturing new-age high-fiber count cables to meet the growing demand from data centers. High-fiber-count cables allow extremely high fiber counts in small cable sizes, thus making them extremely suitable for dense applications in data centers and metro areas. HFCL has further optimized its costs by investing in backward integration, which has led to our customers seeing us as their high-end partners.
Further, HFCL, via its subsidiary, HTL Limited, is also developing state-of-the-art futuristic optical fiber cables. Our Optical Fiber Capacity Expansion, coupled with the vast opportunity landscape, will enable us to strengthen the supply chain, improve our profit margins, and further help us to tap more customers in the domestic and global markets.
“Indian telcos may need investments of up to ~Rs 1 lakh crore only in laying fiber networks over the next 2-3 years.”
WCI: How do you foster innovation and R&D at your company?
HP: Strong investment in R&D and developing robust innovative products has always been the core value of our company. To meet the accelerated rate of fiberization and growing demand for 5G products and innovations, we have heavily invested in the production of next-gen equipment, backward integration, and capacity expansion in the optical fiber cable business. This will enable us to tap into the growing opportunity spectrum across technology, including 5G and OFC. We have a dedicated team of highly qualified engineers with rich experience in developing next generation telecommunication equipment and optical fiber cable. This team works in close coordination with our customers to understand their needs and develop new, innovative products for them. We have cable designers and material experts on our team who work continuously to develop a better offering for our customers.
As a technology-driven company, HFCL owns in-house R&D centers in Bengaluru and Gurgaon. Further, we have also engaged a R&D team in partnership with leading engineering companies like Wipro, Capgemini, Qualcomm, Metanoia, NXP, BigCat Wireless, VVDN and others. These partnerships will help us develop the latest generation yet indigenous telecom products and multicore cables under our intellectual property rights (IPR). We are also designing and developing multiple ranges of optic fiber and optic fiber cable to meet the networking needs of our customers. Our in-house R&D capabilities have further enabled us to offer field-proven optic fiber cables and telecom equipment and solutions at competitive price points to our customers both in India and globally.
WCI: Please outline your goal for 2023 as regards increasing your reach in the domestic and global markets.
HP: FY 2024 will see us continue our strategy of reaching New Products, New Geographies, and New Customers. As part of this, we are focused on the development and production of new-age products and solutions and expanding our global footprint. The governments of leading economies, including the US, UK, and Europe, are investing heavily in building robust fiber connectivity for the deployment of 5G networks and fiber-to-the-home networks. Currently, we have a strong footprint in 30+ countries, serving more than 80 clients globally with optical fiber cables and telecom products. While we already have employees in different countries to look after various overseas markets, we are further appointing distributors and agents to deepen our customer reach.
We have also been able to maintain a strong order book of over INR 7,000 crores as of Q3 FY23, and our exports grew nearly 140 percent YoY during Q3. We have also bagged various significant orders from domestic and overseas industry players for the supply of optical fiber cables. Further, HFCL is also one of the providers of Wi-Fi 6 APs in the WiFi4EU project in the city of Dublin, which will help offer free wireless internet access.
On the back of these tremendous global opportunities, we are positive about growing at a rate of 15-20 percent every year. We are also optimistic about doubling our exports to INR 750 crore by the end of FY23. We aim to increase our revenue share from our optical fiber cable business in the upcoming years, given the opportune landscape. Leading global economies, including the US, UK, Europe, Germany, and France, are some of the key focus markets for us this year. With our focus on developing and designing a wide range of indigenous futuristic products and solutions, we plan to bridge the existing digital divide and expand the reach of high-quality networks across rural, suburban, and dense urban areas.
“We are expanding our consolidated OFC manufacturing capacities, our existing capacity is 25.08 mn fkm and its going to increase further by 10mn fkm and we are expanding our fiber manufacturing capacities from 10 mn fkm to 22 mn fkm p.a.”
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WCI: What, according to you, are the key trends driving the growth and demand in the year ahead?
HP: The pandemic has sharply accelerated the rate of digitalization across the world. As digital adoption has now become a necessity, we will continue to witness a huge demand for innovative products and high-fiber-count cable. This demand is further fueled by key factors like network expansion, a boom in demand for data centers, the 5G rollout in India, and the upcoming 6G transformation. In 2023, this will positively impact demand for (OFC) both in India and in key markets like the US, Europe, and the UK.
2023 will witness organizations embarking on their Industry 4.0 journey. There will be a further acceleration in digital transformation across industries spanning manufacturing, retail, utilities, smart cities, gaming, augmented reality and virtual reality (AR/VR), robotics, education, and healthcare, amongst others. However, as a result of this massive demand for OFC, there’s a worldwide shortage of cables. It has further resulted in driving prices higher and lengthening order delivery times. To combat the supply gap, HFCL is increasing its capacity and developing new cables to meet this demand.
