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Tata Communications delivers steady growth in Q3

Sequential growth in profitability, PAT of INR 58.5 crore (USD 8.2 Mn) in Q3 | Data services revenue grew by +2.8% YoY despite Q3 being a seasonally weak quarter

Mumbai - January 22, 2020

Tata Communications today announces its financial results for the quarter ended December 31st, 2019

Highlights|Q3 FY2020 Data services portfolio

  • Strong growth in Data business; revenue grew by +2.8% YoY on the back of steady performance across all segments. Q3 of last year had a one-time benefit of INR 91 crore because of AFA; on a normalised basis, revenue grew by +5.7% YoY.
  • Data EBITDA at INR 714 crore (USD 100 Mn); down -6.9% YoY. Q3 of last year had an exceptional one-time gain of INR 210 crore which led to high EBITDA; on a normalised basis Data EBITDA has grown by 28.2% YoY.
  • Growth services[1] continue to scale and witness profitable growth; revenue grew by +7.5% YoY. The company is witnessing operating leverage in this portfolio; EBITDA for the quarter came in at INR 51.1 crore as compared to a loss of INR. 32.7 crore in the same quarter last year.
  • Traditional services[2] delivered a steady performance in revenue and profitability; revenue grew by +0.1% YoY. Within this portfolio, the India business continues to deliver strong growth after being affected by operator consolidation last Normalised for AFA, Traditional services grew by 4.5% YoY.

 

Consolidated financial highlights

  • Consolidated revenue at INR 4,229 crore (USD 5 Mn); down -1.0% YoY due to decline in Voice business and one-time AFA benefit in Q3 of last year. Normalised growth +1.2% YoY.
  • Consolidated EBITDA at INR 760.8 crore (USD 106.7 Mn); decrease of -9.7% YoY. When adjusted for one-time AFA benefit and exceptional expenses in Q3 FY19, the normalised consolidated EBITDA grew by +20.3% YoY on the back of strong growth in Traditional services and margin expansion in Growth
  • Consolidated PAT at INR 58.5 crore as compared to a profit of INR 53.9 crore in Q2 FY20.
  • CAPEX for Q3 was INR 490 crore (USD 69 Mn) as compared to INR 454 crore (USD 65 Mn) in Q2.

 

Consolidated Nos.INR

crore

QoQ growthYoY growthUSD MnQoQ growthYoY

growth

Gross revenue4,228.7(1.0%)(1.0%)593.5(2.2%)(0.2%)
EBITDA760.8(8.7%)(9.7%)106.7(9.9%)(9.4%)
EBITDA margin18.0%(150 Bps)(170 Bps)18.0%(150 Bps)(170 Bps)
PAT58.58.6% (66.2%)8.27.5%(67.2%)

 

Commenting on the results, A.S Lakshminarayanan, MD and CEO, Tata Communications, said, “Our Data business continues to drive growth and profitability and we are witnessing strong growth in our Enterprise segment – both in India and internationally. New technologies are redefining customer expectations, driving change in how businesses operate and how people engage with each other and the world around them. Tata Communications plays a central role in this ecosystem – enabling digital transformation that leads to business growth, improved efficiency and better customer experience. Our endeavour is to deliver value for our customers and to drive positive cash flow and sustained profit for our stakeholders.”

 

Commenting on the results, Pratibha K. Advani, Chief Financial Officer, Tata Communications, said, “The outlook of business continues to improve, and we have delivered steady growth despite Q3 being a seasonally weak quarter. The data business continues to drive growth and profitability and strong performance across all segments has helped achieve normalised data revenue growth of 5.7% YoY, Growth services have demonstrated strong revenue and EBITDA growth.

 

Our best-in-class, bespoke solutions that enable customers to digitally transform, are a key differentiator, providing businesses an ability to innovate, transform and grow. The enterprise business continues to grow at a healthy pace of 8.7% and we expect growth and profitability to accelerate further in coming quarters.”

 

An investor fact sheet providing detailed analysis of the results for the quarter ended December 31st, 2019 has been uploaded on the Tata Communications website and can be accessed here.

 

Business highlights | Q3 FY2020

 

Awards

 

 

 

News highlights

 

  • Tata Communications to accelerate development in connected cars with Microsoft Connected Vehicle Platform: By combining the IoT connectivity and network intelligence capabilities of Tata Communications MOVE™ with the Microsoft Connected Vehicle Platform, Tata Communications will enable automotive manufacturers to offer consumers worldwide more seamless and secure driving experiences.

 

  • Tata Communications provides cockpit electronics leader Visteon with a fully managed software-defined wide-area network and earns Best Supplier recognition: With a next-generation hybrid network and Tata Communications IZO™ SDWAN, Visteon has been able to become more agile without compromising security. This has led to an enhanced customer experience, more seamless collaboration and greater business flexibility. It has also lowered the barriers for Visteon to expand to new geographies, including emerging markets like China.

 

  • Netfoundry spins off into a new independent subsidiary of Tata Communications: Netfoundry™, a software and business developed as part of Tata Communications’ Shape the Future innovation and entrepreneurship programme, has become an independent subsidiary within the Tata Communications Group.

Leadership update

ENDS…

[1] Growth services include IZO™, Managed Hosting, Managed Security Services, Broadcast, Video Connect, SIP Trunking, Global Hosted Contact Center, Video Streaming, Mobile New Services, Healthcare, Media Management and Mobile Innovation.

[2] Traditional services include Virtual Private Network, International Private Line, Internet Leased Line, Ethernet, Internet Protocol –Transit, Inmarsat, Content Delivery Network, National Private Line, Mobility, Data Centre, Unified Collaboration and Conferencing.

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Tata Communications delivers steady growth in Q3