The government is planning for 5G auction in FY 2020-21 and it is expected that the Indian operators will deploy 5G equipment in FY 2021-22. Keeping in view the deadline, HFCL has started preparation for 5G equipment by developing new products related to optical fiber cable (OFC), radio, switch and Wi-Fi.
5G would require a number of new products and even demand for existing products will go up since 5G would require 3-4 times more towers than 4G. All these base stations would require high data rates, which would really require communication largely through optical fiber cable and high bandwidth radios which are not used by the operators..
HFCL is a major manufacturer of optical fiber cable and fiber in India. The company has also got new technologies for high bandwidth radio to be used in 5G. Both coupled together, will lead to an increased demand for these two products which the company will leverage once operators start deploying 5G networks in FY 2021-22.
There would also be increased demand for new generation routers which would be required at base stations. Presently, HFCL is designing next generation routers through collaborative R&D and also their own designed router can also be useful for 5G.
The company is also designing switches for 5G which would also be required for 4G networks. These switches would be available in a couple of months.
The company is designing Next Generation Wi-Fi 6 (Wave 6) because with 5G coming up, requirements of downstream equipment need to have a better capability of data transmission and Wi-Fi 6 would provide 4 to 5 times more data than the current generation Wi-Fi 5. It is expected that the product would be available in the October-November 2020 timeframe.
HFCL’s Q4 FY20 revenues stood at Rs. 668 crore as compared to Rs. 1,247 crore during the corresponding quarter of FY19. EBITDA for the quarter is Rs.76 crore as against Rs. 135 crore in Q4 FY20. PBT for the quarter was Rs. 28 crore as compared to Rs. 99 crore during Q4 last year.
The annual consolidated performance during FY20 stood at Rs. 3,861 crore as compared to Rs. 4,780 crores in FY19. Absolute EBITDA grew by 12% at Rs. 516 crore in FY20 compared to Rs. 459 crore last year. Profit before tax was Rs. 358 crore against Rs. 340 crore in FY19.
The company has a strong order book of Rs. 8,409 crore which is 2.2x of FY20 revenue. These orders are largely to be executed over the next one or two years. Our order book also includes O&M orders worth Rs. 1,614 crore ensuring better margin revenue year-on-year basis.
There will be an increased demand for switches, routers, OFCs and radios and HFCL would like to capture a reasonable share of the 5G equipment market in India.