“We are around 30 to 45 days away. So yes, we are still targeting listing by July,” said managing director Ankit Agarwal.
In this project, Sterlite and Dilip Buildcon will collaborate to construct, operate, and maintain the broadband network across the region.
For the January-March 2025 quarter, the company reported a consolidated net loss of ₹40 crore, down from ₹82 crore a year earlier, while revenue jumped 25% to ₹1,052 crore compared to the previous year.
The company’s current market capitalisation is ₹5,174.06 crore.
Here are the edited excerpts from the interview.
Q: What is Sterlite’s role in the ₹2,631 crore BSNL project, and how is it structured?
A: This is a significant achievement for us. The project is being managed by Sterlite Networks Limited, operating under the brand “Invenia,” and it consists of a three-year construction contract followed by a 10-year maintenance phase. We previously established a 10,000 km network in Jammu & Kashmir for the Indian Army, and now we are focused on delivering high-speed broadband connectivity to every village in the area. Sterlite Technologies Ltd. (the publicly traded entity) will provide optic fibre cables and connectivity components for this project and future BharatNet Phase III initiatives.
Q: What portion of revenue will STL recognize from this project?
A: Generally, in such projects, the optic fibre cable portion represents about 5% to 10% of the total project capital expenditure. It’s worth noting that the Indian market—especially BharatNet Phase III—will serve as a crucial growth driver. Both telecom operators are expanding fibre for 5G networks and fixed wireless. We also see heightened fibre demand from data centres. Therefore, concerning BharatNet Phase III—both centrally-led and forthcoming state-led initiatives—we expect significant growth in domestic demand.
Q: So if I understood you correctly, the revenue recognition for your company will be a maximum of 5-10% of the project capex cost—not the demerged entity that secured the order. Is that right?
A: Yes, that’s accurate.
Q: What about revenue throughout the project lifecycle? Since it involves a three-year build and a 10-year operation and maintenance (O&M) contract, will revenue flow similarly?
A:
Most of the optic fibre usage is concentrated in the first two to three years. During the O&M phase, minor amounts of fibre may be used for maintenance and repairs. However, the majority of revenue is generated during construction. This applies not just to the Jammu & Kashmir project but also to other bids under BharatNet Phase III.
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Q: Will this be margin-accretive or margin-dilutive for Sterlite Tech?
A: This will be margin-accretive, positively impacting our growth. Currently, we are functioning at around 50% factory utilisation. With growth in India, the US, and Europe, we expect utilisation to surpass 70%. Historically, once we exceed 70%, EBITDA margins tend to increase from the current 13-15% range to about 18-20%. We are on track to achieve this over the next two to three quarters, and we are quite enthusiastic about it.
Q: By when do you anticipate achieving the 18% EBITDA margin?
A: We believe we will reach that level by year-end. We are also concentrating on the data centre segment, for which we have just launched our complete product range. We are the first Indian company to do so, and we are excited about bringing these solutions to both India and the global market.
Q: What are your expectations for growth in the data centre segment? What is the anticipated incremental revenue?
A: With GenAI-based data centres, the need for optic fibre within the facility increases by 10–15x. Currently, data centres contribute 5–6% of optic fibre demand, and we project this to rise to 20–25% in the coming years. These are high-tech, specialized solutions, typically purchased as complete packages of cable and connectivity.
Our objective is for 25% of our revenue to stem from the enterprise and data centre segments. We estimate that it will take one to two years to achieve this—it’s an important milestone. We have our own intellectual property, partnerships, and ambitious goals, both domestically and internationally.
Q: With the government advocating for public-sector telecom adoption, can we expect more partnerships like this with BSNL? Will the projects be directed to STL Networks or Sterlite Tech?
A: The purpose of the demerger and the listing of Sterlite Networks is to establish two distinct entities. Sterlite Technologies Ltd. functions as the manufacturing entity, whereas Sterlite Networks Ltd. focuses on services and system integration. This separation is deliberate. However, they may collaborate on projects at arm’s length—such as STL providing products for Networks’ initiatives.
Q: You mentioned targeting 25% of revenue from enterprise and data centres. How will that influence your topline growth this year and next? Also, regarding the timing of the demerged entity’s listing, can you confirm if it will be in June or July as previously stated?
A: We are anticipating topline growth, and more importantly, this segment is high-margin. Peers in this area typically see EBITDA margins of 27–35%, and that is our target. As for the listing, we expect it to occur within the next 30 to 45 days, still aiming for July.
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