Vindhya Telelinks looks to hive off fibre infra biz, sell majority stake
Summary
- The move to carve out its fibre infrastructure business comes amid a proposal by the European Commission Directorate General for Trade to levy anti-dumping duty—ranging between 8.7% and 11.4%—on nearly a dozen Indian optical fibre cable makers.
Vindhya Telelinks, a BSE-listed engineering, procurement and construction (EPC) firm, is planning to hive off its fibre infrastructure business and sell a majority stake in the emergent entity, two people aware of the development said on the condition of anonymity.
One of the people cited earlier said that Arthur D. Little, a consulting firm, is running the sale process for the deal at a potential enterprise value of $200 million or ₹1,830 crore.
The companies had not responded to queries from Mint till press time.
Vindhya Telelinks, an MP Birla Group company, was formed as a public-private joint venture between Universal Cables Ltd and the Madhya Pradesh State Industrial Development Corporation Ltd. It makes copper and optical fiber telecommunication cables.
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The move to carve out its fibre infrastructure business comes amid a proposal by the European Commission Directorate General for Trade to levy anti-dumping duty - ranging between 8.7% and 11.4% - on nearly a dozen Indian optical fibre cable makers.
8.7% tax on imports proposed
The body, responsible for EU's policy on trade with nations outside of the EU, has proposed to levy an 8.7% tax on imports from Birla Cable Ltd, Universal Cables Ltd and Vindhya Telelinks Ltd to the European Union, Mint had reported in June.
While Vindhya Telelinks was initially a telecom equipment manufacturing firm, it has diversified into power distribution, system integration and oil and water pipelines that form the EPC division. The latter set of businesses have helped the company increase its sales to ₹4,110 crore in FY24, with the non-telecom verticals bringing in ₹3,523 crore. Profit in FY24 stood at ₹155 crore.
For the quarter ended June, Vindhya Telelinks recorded a revenue of ₹835 crore, with ₹19.63 in profits.
Chief executive officer Sandeep Chawla told Fortune India in March this year that the irrigation projects within EPC are the growth segments for the company over the coming five to 10 years. On the other hand, core telecom business has been slow due to tepid demand from overseas companies, but cable manufacturing will continue to generate revenue locally as the government continues to require supplies of optical fibre cables for the ₹1.39 trillion BharatNet rural internet connectivity project and as private telecom operators Reliance Jio, Bharti Airtel and Vodafone Idea bolster fibre-to-home services.
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Jio and Airtel are increasing fibre deployment to support 4G and 5G services. Both segments will require supplies from companies like Vindhya Telelinks.
The company is also a bidder for supplying optic fibre cables for the ₹65,000 crore BharatNet-III project that will cover the sates of Madhya Pradesh, Rajasthan, Uttar Pradesh (East), Uttar Pradesh (West), Karnataka Uttarakhand, Bihar, Himachal Pradesh, West Bengal, Jammu & Kashmir and the north-eastern states.
