HFCL to triple optic fiber manufacturing capacity to meet 5G demand

HFCL Ltd, a Delhi-based telecom hardware maker, has revised its plans to expand its optical fiber manufacturing capacity from 10 million fiber kilometers per year to 33.9 million fiber kilometers per year. The firm was earlier planning to expand capacity to 24.94 million fiber kilometers per year. 

To expand the manufacturing capacity, HFCL said that it has earmarked an investment of ₹470 crore and will use a combination of debt and internal funds to finance the expansion. The capacity will be added in phases, with the completion expected by December 2024.

HFCL is one of India’s leading suppliers of telecom hardware including optical fiber cables, 5G Radio Access Network (RAN) products, and switches to telcos, cable operators, railways, and defence sector. 

It has an optical fiber and optical fiber cable manufacturing plant in Hyderabad and optical fiber cable manufacturing plant in Goa. HFCL said that the manufacturing expansion is an extension of its earlier expansion plans for the Hyderabad facility.

Following the rollout of 5G in India which has spurred demand for optic fiber in India, the HFCL is anticipating double digit growth every year and is also expecting to double exports for telecom gear. 

“HFCL is witnessing strong market demand for Optical Fiber Cable and this strategic initiative aims to achieve the dual objectives of margin accretion and insulation from sourcing vagaries,” the company said in a statement.

The company added that the expansion plans will strengthen supply chain capabilities but also improve overall margins. 

In April, the Ministry of Road Transportation & Highways announced that the National Highways Authority of India (NHAI) will develop 10,000 kilometers of optic fiber cable infrastructure across the country by the end of the fiscal year 2024-25 to improve internet connectivity across India. 

Telcos in India are expected to spend $1.5 to $2.5 billion in India on optical fiber cable to support 5G networks in the next three to four years, Business Standard reported in September 2022. 5G was announced in India in October and since then has been rolled out in over 400 cities and also by several enterprises as private networks. 

In February 2021, the government announced a ₹12,000 crore production linked incentive (PLI) scheme to boost local manufacturing of telecom and network equipment. 

Also, the commerce ministry data reportedly shows that India’s telecom hardware export grew 90% to ₹80,490 crore from April 2022 to January 2023.