Communication cable and optical fibre manufacturer ATC is investing R60-million to increase the production capacity of optical fibre and optical fibre cable at its Brits plant west of Pretoria to more than 1-million fibre kilometres (FKM) a year.
The investment places ATC, owned by Marconi (51%), Reunert (38.5%) and Pirelli (10.5%), in a strong position to capitalise on the global surge in demand growth for optical fibre cable at a time when world-wide production capacity of optical fibre is falling more than 30% short of total demand.
ATC managing director Cobus Malan says worldwide demand for optical fibre in 2000 was 135-million FKM, while total supply was just 105-million FKM. He adds that the entire 2001 output of all optical fibre manufacturers, of which there are less than 30 plants in total and ATC the only one in Africa, is already sold.
"By 2004 demand will have reached 165-million FKM, representing compound annual growth of 25%. Our investment to increase production output is therefore well-timed and will significantly boost our exports into especially the US, UK, Italy, Romania and New Zealand. Because of the focus on exports, ATC will accrue export credits with the Department of Trade and Industry. Our counter-trade proposal is already with the DTI and negotiations are in the process of being finalised."
Malan adds that while investments in additional capacity are being made elsewhere in the world, the shortage of optical fibre is expected to continue for at least the next three or four years.
The capacity expansion programme at ATC`s plant is being executed in two phases, the first of which comes on line at the end of this month (March 2001). The second phase will be completed by the end of February 2002.
"With the ability to manufacture more than 1-million FKM a year of both optical fibre and optical fibre cable when the second phase is completed, ATC is poised to not only take advantage of international growth in demand but, and perhaps more importantly, also to service the needs of the existing local telecommunications infrastructure network as well as the additional network that will be established when the second network operator is appointed. The plant expansion is also generating economies of scale that make us very competitive."
Malan says any second network operator that is appointed in South Africa will have to invest at least R1-billion in network infrastructure, the optical fibre cable component of which could be as much as 400 000 FKM.
"With this in mind we already have plans in hand for a further expansion to almost double the capacity at the Brits plant within the next three to four years. Additional capital has been earmarked for this investment."
To place in perspective the 1-million FKM optical fibre that will annually be produced by ATC when the second phase is completed next February, this length would be sufficient to encircle the earth at the equator almost 25 times.
Malan is understandably bullish about ATC`s prospects, particularly when it is considered that it is the only manufacturer of optical fibre in Africa as well as the continent`s leading manufacturer of communication cable. While there are other manufacturers of optical fibre cable, they have to import their optical fibre component, which makes up some 80% of the total cable cost, so that little value is added.
ATC has a long-standing technology agreement with Pirelli, the largest cable manufacturer in the world, and also has access to other optical fibre patents. The plant, which is accredited to the ISO 9001 quality system management standard, is now also implementing a programme to obtain the ISO 14000 environmental management standard. It manufactures single mode optical fibre to the International Telecommunications Union (ITU) standard G652.
Malan says that an enhanced fibre for high bandwidth applications known as the G655 optical fibre is now emerging. "Should demand for this fibre surge in South Africa, we are able to import it from Pirelli and if total demand internationally is such that it dictates that we should manufacture this fibre at Brits, we can set the factory up to do so in less than two months."
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ATC (Pty) Ltd
ATC (Pty) Ltd has its head office and manufacturing plants at Brits, with branch offices at Midrand, Durban and Cape Town, supplying its products locally and exporting to more than 50 countries world-wide. ATC manufactures optical fibre, both copper and optical fibre communication cable, cable assemblies and accessories. It also supplies optical fibre test equipment, splicing machines and splice management products. It furthermore provides a turnkey solution for optical fibre transmission systems for security monitoring, industrial control and smart highway communication as well as Installation projects and training courses.
Marconi plc
Marconi plc is a global communication and IT company with around 49,000 employees worldwide and sales in more than 100 countries. It supplies advanced communication solutions and the key technologies and services for the Internet. Marconi plc is listed on the London Stock Exchange under the symbol MNI and NASDAQ under the symbol MONI. Marconi Communications South Africa (MCSA) has its head office and network division in Midrand and a production plant in Springs. Empowerment group African renaissance Holdings (ARH) holds a 25% equity stake in MCSA.