HFCL to Expand Presence in Europe with setting up of Optical Fiber Cable Plant in Poland to capitalize growing demand of OFC in Europe

· HFCL to establish a cutting-edge optical fiber cable manufacturing facility in Poland, aligning with Europe’s gigabit connectivity opportunities

· The plant to begin with an initial capacity of 3.25 mn fkm p.a. scalable up to 7 mn fkm p.a. to fulfill increasing OFC demand

· This expansion will enable HFCL to gain significant increase in purchases by existing and new customers

· To bolster HFCL’s presence in Europe with a target to significantly increase its export revenue share in its OFC vertical revenue from 30% to 70% within the next 4-5 years

Bengaluru, February 21, 2024: HFCL Limited (HFCL), a leading technology enterprise and integrated next-gen communications product including optical fiber cable (OFC) and solutions provider, announced its strategic expansion into Europe with the setting up of a state-of-the-art OFC manufacturing plant in Poland. This move marks a significant milestone in the company’s global expansion strategy, aimed at addressing the increasing demand for OFC in European markets such as UK, Germany, Belgium, France, Poland, etc.

With an ambitious vision to capitalize on burgeoning market opportunities and fortify its position as a key player in the OFC domain, HFCL aims to ramp up share of exports in its OFC vertical revenue from the current 30% to 70% within the next 4-5 years. Europe, with its promising growth prospects, particularly stands out as a focal point for HFCL’s strategic initiatives.

Europe’s OFC market is projected to experience a compound annual growth rate (CAGR) of around 4.5% over the next five years with expected demand of 90 mn fkm p.a. 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 which will lead to increased demand of OFC.

Factors such as bandwidth limitations of traditional cable and copper networks, regulatory imperatives driving fiber deployment and escalating traffic demands further underscore the critical need for full fiber solutions. Furthermore, recent geopolitical developments and regulatory shifts like possible imposition of anti-dumping duties underline the necessity for localized 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.

Poland has become the favoured European nation, primarily due to its attractive market access to other European nations for incentive programs and cost competitiveness. The country’s strong connectivity is further enhanced through its well-developed ports. The availability of specialized skills at relatively lower labour cost than other European nations further enhances its attractiveness of being a premier manufacturing destination.

HFCL’s state-of-the-art manufacturing plant in Poland will begin with a capacity of 3.25 mn fkm and scalable up to 7 mn fkm, with initial capital outlay up to ~INR144 Crores, fulfilling increasing OFC demand. This strategic move will not only enhance HFCL’s agility but also reduce transit times by approximately six weeks, thereby enabling increase in order fulfilment capacity. 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.

Mr. Mahendra Nahata, Managing Director, HFCL, emphasized, “Our decision to set up a manufacturing unit in Poland underscores our commitment to meeting the evolving needs of our customers. With Europe expected to remain a key market for optical fiber cable led communication, our foray into Poland not only ensures unfettered access to this growing European market but also helps improve the agility and responsiveness in catering to increasing optical fiber cable demands of our customers. With this strategic expansion, we are poised to align with Europe’s vision, which anticipates gigabit connectivity as a cornerstone of its future. Our commitment to Europe’s digital future is based on the unique approach of superior quality, customised solutions and innovative solutions in fastest turnaround time.”

The establishment of HFCL’s OFC manufacturing plant in Poland marks a significant milestone in the company’s journey toward global leadership in telecommunication solutions. Harnessing its technological expertise, operational efficiency and strategic foresight, HFCL is set to not only create employment opportunities but also spur industrial advancement in Poland.

HFCL including its subsidiary HTL Limited has three cutting-edge manufacturing plants in India with a 25 mn fKm p.a. capacity, manufacturing the highest quality OFC for customers across the world. With this facility, HFCL is on a journey to expanding their international market reach, while continuing to offer the same level of high quality to their European customers.