Telecom equipment manufacturer HFCL has declared that its board has sanctioned a new investment of around Rs 400 crore to enhance its production capabilities for optical fibre and optical fiber cables.

The planned expansion will be financed through a combination of internal funds and loans, and is anticipated to be finalized by July 2028.

"Considering the robust order backlog for optical fiber cable (OFC) and optical connectivity items, a solid stream of additional business opportunities anticipated to arise in the near to medium term, and the positive long-term demand perspective worldwide, the Board of Directors has sanctioned an expansion of the Company's Optical Fiber and Optical Fiber Cable manufacturing capabilities with an estimated capital investment of around Rs 400 crore," HFCL mentioned in a regulatory filing.

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HFCL observed that the demand is driven by various factors, such as Artificial Intelligence (AI) infrastructure, hyperscale data centers, cloud computing, high-performance computing, 5G rollouts, FTTH and broadband growth, enterprise fiberization, rural connectivity efforts, and telecom network modernization initiatives.

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As stated in the filing, the firm’s overall capacity for OF manufacturing will increase to 38.50 million fibre kilometres (fkm) annually, up from the current expansion goal of 33.90 million fkm. Likewise, the OFC production capacity will increase to 56.36 million fkm annually, rising from the current goal of 42.36 million fkm.

Currently, the company possesses a capacity of 28 million fkm for optical fiber and 34 million fkm for optical fiber cables.

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"The suggested capacity increase will bolster HFCL's production capabilities, elevate its capacity to fulfill present and upcoming orders, boost operational efficiencies and economies of scale, enhance supply chain resilience, and aid its strategy for export growth. The growth will allow the company to extract more value from its integrated manufacturing system and backward integration efforts, while also strengthening its status as a top global producer of optical communication products," the company states.