Sterlite Technologies Limited

Lakshmi Ayer

HEAD M&A, STL

Pankaj Dhawan

HEAD IR, STL

Ankit Agarwal

MD, STL

330 billion

ng us for our quarter 2 FY23 Earnings Conference Call. The Telco CAPEX was estimated at close to $330 billion for the period of 12 months ending June 2022. I think this is a very interesting chart which real

17.8%

CAPEX intensity of the Telecom operators and I think as you can see on the chart almost at about 17.8% close to 18% is actually the highest in the last 10 years and really I think lot of the demand th

18%

y of the Telecom operators and I think as you can see on the chart almost at about 17.8% close to 18% is actually the highest in the last 10 years and really I think lot of the demand that was pent u

rs,

. In line with our expectations, strong investment momentum is continuing across these four levers, 5G, fiber-to-the-home, ready fiber-to-the-x, datacenters as well as citizen networks. 5G is becomi

500 billion

ly the fastest growing technology in the world today. Operators are expected to invest more than $500 billion in 5G between 22 and 2025. One interesting data point is as per Ericsson more than 210 service pr

700 million

rld have launched 5G services globally and the number of 5G subscribers are expected to go from a 700 million currently to almost 4.5 billion by 2027. So, massive jump clearly in number of subscribers and re

4.5 billion

obally and the number of 5G subscribers are expected to go from a 700 million currently to almost 4.5 billion by 2027. So, massive jump clearly in number of subscribers and really leading the charge in terms

2 million

which also plans to invest significantly in 5G and fiber and increases 5G pay stations from about 2 million today to almost doubling to over 3.7 million by 2025. In addition to that, FTTX really is becom

3.7 million

G and fiber and increases 5G pay stations from about 2 million today to almost doubling to over 3.7 million by 2025. In addition to that, FTTX really is becoming all pervasive and by that you would look at

125 billion

nterprise, fiber to small cell, fiber for smart city applications. Just one example, about $125 billion has been earmarked for fiber to the home just in North America over the next 5 years. If you look

30 million

operators in the US like AT&T for example, they plan to almost double its fiber coverage to about 30 million locations by 2025. Another example like Frontier-is targeting about 10 million homes and so many

10 million

coverage to about 30 million locations by 2025. Another example like Frontier-is targeting about 10 million homes and so many other cases like that if it is Telecom, Orange, also operators in India as well

“There will be an opportunity for you to ask questions after the presentation concludes.”

“If you look at last Telecom operators in the US like AT&T for example, they plan to almost double its fiber coverage to about 30 million locations by 2025.”

“The datacenter CAPEX is expected to grow by almost 10% CAGR over the next 5 years to a massive $350 billion by 2026.”

“Lastly, on the Citizen Network side, US is implementing close to $65 billion project to connect particularly rural parts of America connecting the unconnected essentially.”

“Globally, we have also shared what is the CAGR expected across the regions and also very importantly looking at ex-China, the Optical Interconnect demand which is very important area for our growth and development.”

“This will be a positive driver both for our cable and interconnect, but equally for our services business and in terms of cable kilometers, probably around 200,000 cable kilometers I expected to be deployed over this period as well.”

“So, in line with what we have been sharing in our previous calls as well, again very proud of this facility, especially the one in the US that has come up now, which will really be a world class optical fiber cable facility and similarly in China, we are actually restarting the operations and we plan to scale these up within this quarter and we do believe that they will reach full capacity utilization by quarter 1 of FY24.”

“So, we are confident of these orders coming through and this attach rate growing in the near and medium term.”

“As the industry really kicks off its 5G rollout, we expect the revenue to ramp up in the near future.”

“As stated earlier that we had secured a good order book in UK and increasing the execution pace in the UK, we plan to be profitable in the UK services by H1 of FY24.”

Ankit Agarwal

32

Pankaj Dhawan

13

Prateek Singhania

12

Sunny Gosar

7

Lakshmi Iyer

7

Saket Kapoor

5

Mukul Garg

4

Pranav Kshatriya

1

Pankaj Dhawan

Ladies and gentlemen, good day and welcome to the STL Quarter 2 FY23 Earnings Conference Call. I am Pankaj Dhawan - Head, Investor Relations at STL. To take us through the quarter 2 results and to answer your questions, we have Ankit Agarwal - MD, STL and Lakshmi Iyer - Head, M&A and Corporate Development at STL. Please note that all participant lines are in the listen-only mode as of now. There will be an opportunity for you to ask questions after the presentation concludes. Please note that this call is being recorded. You can also download a copy of the presentation from our website at www.stl.tech. Before we proceed with this call, I would like to add that some elements of today's presentation may be forward-looking in nature and hence must be viewed in relation to the risk pertaining to the business. The Safe Harbor clause indicated in the presentation also applies to this conference call. For opening remarks, I now hand over the call to Ankit Agarwal. Over to you, Ankit.

Ankit Agarwal

Thank you, Pankaj. Good day to everyone. Thank you for joining us for our quarter 2 FY23 Earnings Conference Call. The Telco CAPEX was estimated at close to $330 billion for the period of 12 months ending June 2022. I think this is a very interesting chart which really demonstrates the growing CAPEX intensity of the Telecom operators and I think as you can see on the chart almost at about 17.8% close to 18% is actually the highest in the last 10 years and really I think lot of the demand that was pent up because of lack of deployment during COVID, obviously 5G picking upstream around the world and then also fiber to the home. Combination of multiple factors I think is where we see the CAPEX growing. Also, in our conversations with some of our key customers globally, we continue to see a strong demand scenario from them and we believe quite comfortably that it will continue despite some of the current economic headwinds. In line with our expectations, strong investment momentum is conti

Pankaj Dhawan

Thanks Ankit. Ladies and gentlemen, please note that if you want to ask the question, you can click on Raise Hand and we shall take your questions one by one. Alternatively, you can send us your questions through Chat also. So, we will take the first question from the line of Mr. Pranav Kshatriya. Pranav, you can go ahead and ask your question, please.

Pranav Kshatriya

I have three questions, my first question is regarding the cost, the optical fiber business has been sort of hit by cost inflation especially the helium gas prices and the oil related prices, so can you please give some color on how those cost are trending, I understand that logistics cost have sort of come down, but what about the other raw material prices, that is my first question? Secondly, on the macroeconomic environment if you look at, we are seeing the interest rate raising, typically fiber optic is the product which has a very long period uses and to that extent it is reasonably sensitive to interest rate, so how do you see this panning out because even some of the customers which you mentioned, for example, Google is also sort of looking to cut cost and so lot of other tech giants, so how do you see this in the medium to long-term impacting the optical fiber business? And my last question is on the ramp down of the wireless business, so it is good to know that it will save ar

Ankit Agarwal

Absolutely, good questions, Pranav. So, I think first question on the cost inflation, I think you are right, we continue to still see cost pressures particularly with some gases like helium, there are still challenges with supply chain on that globally. We worked a lot on creating alternate suppliers, etc., that is still a cost increase for us and supply chain risk for us. The other one is still polyethylene and etc., which are linked to the oil prices that is still something that continues to stay high and impacts our cost. Logistics have come down probably in the range of 15 to 20%, say over some period of time now. That is something that has benefited us and will continue to benefit us as we continue to shift from say India to Europe and US and other parts. I think the path has been positive for us is that we have been able to pass on some of the cost increases to customers in quarter 2 and we will continue to see some of that further come through in quarter 3 and quarter 4 and that

Pankaj Dhawan

Thanks, Pranav. We will take the next question from the line of Mukul Garg. Mukul, you can ask your question now.