• Consolidated Revenue: INR5,798 crores, up 2.9% year-on-year and 0.5% quarter-on-quarter.

• EBITDA Margins: 20.4%, improved by 100 basis points quarter-on-quarter.

• Profit After Tax (PAT): INR256.6 crores, up 12.9% quarter-on-quarter.

• Free Cash Flow (FCF): INR841 crores, compared to a negative FCF of INR194 crores in Q2.

• Data Revenue: INR4,903 crores, up 6.2% year-on-year and 1.4% quarter-on-quarter.

• Digital Revenue: INR2,313 crores, up 10.2% year-on-year and 4.1% quarter-on-quarter.

• Cash CapEx: INR486 crores.

• Return on Capital Employed (ROCE): 16%, a decline of 40 basis points quarter-on-quarter.

• Net Debt: INR10,468 crores, with a net debt-to-EBITDA ratio of 2.34x.

• Warning! GuruFocus has detected 10 Warning Signs with IGGHY.

Release Date: January 22, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Tata Communications Ltd (BOM:500483) reported a 2.9% year-on-year growth in consolidated revenues, reaching INR5,798 crores.

• EBITDA margins improved by 100 basis points quarter-on-quarter, reaching 20.4%.

• The company achieved a significant increase in free cash flow, reporting INR841 crores compared to a negative FCF of INR194 crores in Q2.

• Digital revenues grew by 10.2% year-on-year and 4.1% quarter-on-quarter, driven by strong performance in the collaboration and managed CPaaS portfolio.

• The order book and funnel remain robust, with a 50% year-on-year increase in large deal funnel additions, indicating strong future revenue potential.

Negative Points

• Core connectivity revenues experienced a slight decline of 0.9% quarter-on-quarter.

• The incubation services, specifically Fabric IoT, saw a decline of 20.9% quarter-on-quarter.

• The media portfolio witnessed a 2% year-on-year decline, despite a 6.7% increase quarter-on-quarter.

• Challenges in the SAARC region due to geopolitical factors have impacted collections.

• The company's net debt increased to INR10,468 crores, with a net debt-to-EBITDA ratio of 2.34x, partly due to ForEx impacts.

Q & A Highlights

Q: How is the demand environment affecting Tata Communications, especially with changes in the U.S. administration and IT services companies reporting increased discretionary spending? A: Amur Lakshminarayanan, CEO, explained that Tata Communications operates in the digital infrastructure space, which is not directly impacted by the demand cycles of IT services companies. The company's order bookings have been robust, and while Q3 saw normal closure rates, the demand environment remains positive with a strong funnel and large deal opportunities.