The company believes that the move is positive for investors as the entity will have a better financial profile post the de-merger and will reflect better return ratios
The demerger of Sterlite Technologies is complete and will be effective from April 1, 2015. Keeping in mind the varying profiles of investors, the company decided to hive off its power business as Sterlite Power Transmission from Sterlite Technologies, which will continue to focus on telecom infrastructure. The company believes that from the point of view of investors, the move is positive as the entity will have a better financial profile post de-merger and will reflect better return ratios, which were getting impacted by the capex intensive power business.
Sterlite Technologies is a vertically integrated telecom equipment company and is looking to partake in the massive infrastructure rollout that is expected to happen when a billion plus Indians start accessing high speed data services. Currently, only 5% of India is estimated to be using broadband services (speeds upwards of 5 mbps) and over the next few years, Rs 100,000 crore will be spent on building the broadband infrastructure by both private companies and the government.
Other than building broadband networks, laying the fibre connecting homes and telecom towers, Sterlite is also looking at opportunities arising out of smart cities, as more and more cities look at digital solutions to provide utility services to citizens. On the road ahead, Anand Agarwal, CEO, Sterlite Technologies, 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 city projects, the company has a host of solutions which include both applications and software to deliver services. Most cities currently do not have the infrastructure layer (fibre network), transmission networks, but are looking at building these such that smart solutions can be provided digitally. Sterlite has capabilities of designing and building these smart networks. While the dominant play may continue to be telecom service providers, smart cities and the government’s rural broadband play under the Bharat Net plan will also provide opportunities.
Source: Business Standard