Key Points
- Net profit fell 29 per cent to Rs 134 crore on higher exceptional charges
- Revenue rose 10.5 per cent to Rs 6,583 crore driven by digital portfolio
- Exceptional losses of Rs 106 crore included data centre fire and staff cuts
Tata Communications reported a 29 per cent decline in quarterly net profit to Rs 134 crore, weighed down by exceptional charges including losses from a data centre fire and staff restructuring costs, even as revenue grew on the back of its digital services business.
The telecommunications and digital infrastructure provider posted net profit of Rs 134.23 crore for the quarter ended 30 June, down from Rs 189.98 crore in the same period last year. Revenue from operations increased 10.5 per cent to Rs 6,582.82 crore from Rs 5,959.85 crore.
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The sharper fall in bottom line compared with revenue growth was driven by exceptional losses that ballooned to Rs 106.36 crore from Rs 20.44 crore a year earlier. These one-time charges included Rs 44.78 crore towards staff cost optimisation — typically severance payments linked to workforce reductions — Rs 30.10 crore related to losses from a fire at a third-party co-located data centre, and a Rs 50 crore provision for contractual obligations.
Digital growth offsets legacy decline
The Tata Group firm’s digital portfolio continued to outpace its traditional voice business. Revenue from the digital portfolio grew 17.1 per cent to Rs 2,940 crore, while next-generation platforms expanded 31.3 per cent during the quarter. Data revenue overall increased 11.3 per cent to Rs 5,708 crore.
Revenue from the Campaign Registry business — a platform that helps brands send verified commercial messages — rose to Rs 258.70 crore from Rs 189.38 crore. Voice solutions revenue, the company’s legacy business, declined to Rs 381.95 crore from Rs 394.54 crore.
Profit after tax from continuing operations fell 44.2 per cent to Rs 129.72 crore from Rs 232.33 crore. The company also recorded a Rs 42.19 crore loss from discontinued operations during the quarter, which explains the difference between this decline and the 29.4 per cent fall in net profit attributable to shareholders.
Operating margins narrow
The company’s earnings before interest, tax, depreciation and amortisation — a measure of operating profitability before accounting adjustments — rose 8.2 per cent to Rs 1,230 crore. However, EBITDA margin narrowed to 18.7 per cent from 19.1 per cent in the year-ago quarter.
On a normalised basis, which strips out exceptional items, EBITDA stood at Rs 1,281 crore, representing year-on-year growth of 12.7 per cent, the company said. The normalised margin was 19.4 per cent.
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Profit before exceptional items rose marginally to Rs 317.74 crore from Rs 311.69 crore. The exceptional charges pulled profit before tax down to Rs 211.38 crore from Rs 291.25 crore. A partial offset came from the reversal of an Rs 18.52 crore provision following a reassessment of the impact of the new labour codes.
Ganesh Lakshminarayanan, managing director and chief executive officer, said the company had begun the financial year with growth across its core and digital portfolios and remained on track to deliver double-digit EBITDA growth.
“Our focus is on accelerating growth in our network fabric business, expanding our platform revenues, improving digital profitability and strengthening our EBITDA-to-cash conversion. We have the right foundations, a clear roadmap, and a sizeable opportunity ahead,” Lakshminarayanan said.
The company would focus on expanding its network fabric business and platform revenues, improving the profitability of its digital portfolio and strengthening the conversion of EBITDA into cash, he said.
Your Questions, Answered
Why did Tata Communications profit fall in Q1?
Exceptional charges totalling Rs 106 crore dragged down profit. These included Rs 44.78 crore for staff restructuring, Rs 30.10 crore from a data centre fire at a third-party facility and a Rs 50 crore provision for contractual obligations.
How did Tata Communications revenue perform in the June quarter?
Revenue from operations grew 10.5 per cent to Rs 6,582.82 crore from Rs 5,959.85 crore in the year-ago quarter. Digital portfolio revenue rose 17.1 per cent while next-generation platforms expanded 31.3 per cent.
What is Tata Communications EBITDA margin?
The reported EBITDA margin was 18.7 per cent, narrowing from 19.1 per cent a year earlier. On a normalised basis excluding exceptional items, the margin was 19.4 per cent.
What is Tata Communications management guidance?
CEO Ganesh Lakshminarayanan said the company remains on track to deliver double-digit EBITDA growth and will focus on expanding network fabric business, improving digital portfolio profitability and strengthening cash conversion.