Good demand for fibre optic cables to drive Opcom earnings

BY ELAINE ANG

OPCOM Holdings Bhd expects a robust and dynamic local market for fibre optic cables to help drive the company's future earnings, said chairman and managing director Datuk Mukhriz Mahathir. 

“The demand for fibre optic cables is still good,” he told StarBiz in a telephone interview yesterday. 

Opcom, which is the main producer of fibre optic cables in the country, recently entered into an agreement with its subsidiary Opcom Sdn Bhd to make and supply fibre optic cables to its major customer, Telekom Malaysia Bhd.  

The supply mandate constitutes about 80% or RM171.4mil of a new three-year supply contract worth RM214.2mil. 

“We are very happy with the latest contract as it ensures a regular stream of income of RM50mil to RM60mil for Opcom annually for the next three years,” Mukhriz said. 

Opcom shares have been actively traded since the company was listed on the Mesdaq market on Dec 23, 2003. The share price hit an intra day high of RM3.12 on Dec 29. The counter rose 7 sen to close at RM1.90 on volume of 755,500 shares yesterday. 

Commenting on Opcom's future plans, Mukhriz said the company had made plans to ease its dependence on Telekom, which contributed about 90% to the company's revenue. 

He said Opcom was in the process of expanding its production facilities in Shah Alam, Selangor, by installing new lines to manufacture loose tube fibre optic cables. 

“The lines should be ready in the third or fourth quarter and this will enable us to supply to other telcos which do not use slotted core fibre optic cables,” he said, adding that this would help boost Opcom's revenue. 

This was in line with the growth in the demand for fibre optic cables as fixed line, mobile telephony and Internet access were expected to register robust growth going forward.  

OSK Research in an earlier research report also expects the usage of fibre optic cable in the country to continue to grow.  

“The local fibre optic market is expected to grow at about 15% annually for the next five years. As an industry leader, Opcom would most likely mirror the industry’s growth,” it said, adding that network upgrades by the major telecommunications providers would be the primary catalyst for future earnings. 

Datuk Mukhriz Mahathir

That said, Mukhriz is also steering the company towards becoming a broadband infrastructure company rather than only a supplier of fibre optic cables. 

“We want to diversify our product base by supplying other kinds of hardware and services, looking into design work and developing software for the telecommunications sector.  

“This will provide us with a wider horizon,” he said.  

Mukhriz said telcos like Telekom were aggressively developing their broadband services and Opcom would be well positioned to support them in their business. 

“There is also talk that Telekom may be splitting its retail and wholesale business, which will translate into more demand for broadband infrastructure and services,” he said. 

He said that Opcom wanted to be in the position to provide such services. 

According to Mukhriz, the company will also aggressively targeting other local telcos to provide broadband infrastructure and services this year. 

“Our cable business is very stable, it is time to focus on business development,” he said. 

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