HFCL announces optical fibre cable plant in Poland at initial outlay of up to Rs 144 crore

Indian telecom gear maker HFCL has announced a strategic expansion into Europe with the setting up of an optical fibre cable manufacturing plant in Poland. In a release, HFCL said the move marks a milestone in the company's global expansion strategy, aimed at addressing the increasing demand for OFC in European markets such as the UK, Germany, Belgium, France, and Poland, among others.

HFCL's manufacturing unit in Poland will begin with a capacity of 3.25 million fibre km (km) and scalable up to 7 million km, with an initial capital outlay of up to Rs 144 crore, thus fulfilling the increasing OFC demand. "This strategic move will not only enhance HFCL's agility but also reduce transit times by approximately six weeks, thereby enabling an increase in order fulfilment capacity," it said.

The establishment of the manufacturing facility in Poland will be facilitated through the incorporation of a new stepdown subsidiary in Poland under HFCL B.V., a wholly-owned subsidiary of the company in the Netherlands, it explained. To tap the market opportunities and cement its position in the OFC domain, HFCL aims to ramp up its share of exports in its OFC vertical revenue from the current 30 per cent to 70 per cent in the next 4-5 years.

Europe, with its promising growth prospects, particularly stands out as a focal point for HFCL's strategic initiatives, the release said. Europe's OFC market is projected to experience a compound annual growth rate (CAGR) of around 4.5 per cent over the next five years with an expected demand of 90 million km per annum by 2028. "The FTTH council estimates around 308 million homes in the EU region to have FTTH connectivity by 2028, speeding up deployment by 3-5 years. This signals a rapid expansion of FTTH networks in these areas that will lead to increased demand of OFC," it said. Factors such as bandwidth limitations of traditional cable and copper networks, regulatory imperatives driving fibre deployment and escalating traffic demands underscore the critical need for full fibre solutions.

Recent geopolitical developments and regulatory shifts like the possible imposition of anti-dumping duties highlight the necessity for localised manufacturing to mitigate risks and ensure seamlessly enhanced access to target markets. "HFCL's decision to establish a manufacturing footprint in Europe aligns perfectly with this imperative, safeguarding from potential regulatory shifts and enhancing competitiveness in the region.

This proposed expansion will enable HFCL to enjoy a significant increase in purchases by existing customers," the company said. Poland has become the favoured European nation, primarily due to its attractive market access to other European nations for incentive programs and cost competitiveness, it said. According to HFCL, the country's strong connectivity is further enhanced through its well-developed ports. The availability of specialised skills at relatively lower labour costs than other European nations further enhances its attractiveness of being a premier manufacturing destination.