Sterlite Technologies Ltd, has announced the demerger effective from the appointed date of April 1, 2015 of its Power Business into Sterlite Power Transmission Ltd. The Demerger Scheme was earlier approved by the High Court of Mumbai on April 22, 2016 post approval by all relevant stakeholders of Sterlite Tech on December 15, 2015.
The demerger of power transmission business is a strategic decision that provides a well-deserved value building opportunity for the telecom business. From the investors’ perspective, the listed entity post demerger will have a better financial profile:
• With significant debt reduction on balance sheet
• Improved return ratios
• High-cash generating business
• Strong growth outlook
Sterlite Tech also announced completion of Elitecore Technologies’ merger, which is a global provider of Operation Support Service (OSS) & Business Support Service (BSS) solution. Its pre-integrated platform has the capability to monetise all IP networks including 3G/LTE, Wi-Fi, Cable, ADSL, FTTH. Sterlite Tech had acquired Elitecore Technologies in 2015. The merger of Elitecore into Sterlite Tech will allow for seamless integration of two companies leading to stronger customer offerings as one-telecom entity.
Sterlite Tech has been in transformation phase for the last few years from a manufacturing play to a specialty business model straddling the entire telecom value chain by significantly adding its presence into solutions, software and services. This evolution of business model will substantially increase the company’s addressable market size and drive improved ROCEs.
Ratifying this transformation, Sterlite Tech has implemented a new brand identity and a logo. The new avatar of Sterlite Tech is world’s leading & India’s only vertically integrated Optical Communication Products, Services & Software Company. It aims to transform everyday living by delivering smarter networks. Over the past few years, Sterlite Tech has been closely involved in India’s nation building efforts, working with governments and private operators to build best-in-class broadband infrastructure. As India quickly moves to its vision of technological evolution, Sterlite Tech’s smart networks will accelerate ICT performance and drive sustained growth in the coming decade. The company has successfully executed and strengthened its core business with well-timed organic and inorganic moves.
On the international front, the company is strengthening its existing global footprint in 75 countries & furthering its customer engagements. Through its manufacturing facilities in India, China and Brazil, Sterlite Tech is already a major supplier to global Telcos with supply footprint across 20 countries. Globally, optical fiber demand was close to 370 million fkm last year, and continues to have an optimistic outlook in the backdrop of growing data consumption.
Pravin Agarwal, Whole-Time Director & Vice Chairman, Sterlite Technologies, said, “The last few years have seen Sterlite Tech grow rapidly, and we have developed breakthrough innovations with over 100 patents. As we ready ourselves for the next big evolution, the demerger gives us a unique and compelling business model to respond to a dynamic market scenario, and in the process create maximum value for our stakeholders.”
Dr Anand Agarwal, CEO, Sterlite Technologies, said, “This restructuring underscores our commitment to India’s broadband transformation. We enjoy a distinct and formidable advantage of powering the digital revolution for India, and in the process, transforming millions of lives across the country. The demerger puts us in an even better position to serve our nation, and create great products and services for our customers and partners alike. Our growth over the last several years bears testimony to the astuteness of our vision and we remain committed to making India truly digital.”
As part of the company’s growth accelerator strategy, Sterlite Tech has carved out a distinct pure play vertical focus on the Telecom Sector. This has been achieved through its optical communication product portfolio of high technology glass preforms, optical fibres & fibre cables, new service offerings such as system & network integration, as well as OSS/BSS enablement.
The demerger has thus allowed the company to aggressively pitch for the opportunities of a rapidly changing broadband market, reignite its innovation pipeline, strengthen its go-to-market strategy and unlock greater value for shareholders.