• Consolidated Revenue: INR5,767 crore, up 18.4% year on year and 2.4% quarter on quarter.

• Data Revenue: INR4,834 crore, a growth of 21% year on year and 3% quarter on quarter.

• Digital Services Revenue: INR2,221 crore, up 52.4% year on year and 3.6% quarter on quarter.

• EBITDA Margin: 19.4% for the quarter.

• Profit After Tax (PAT): INR227 crore, up 3% year on year.

• Net Debt to EBITDA Ratio: 2.37x.

• Cash CapEx: INR447 crore.

• Order Book Growth: Increased by over 25% year on year.

• Core Connectivity Revenue: INR2,613 crore, up 3% year on year and 2.5% quarter on quarter.

• Net Debt: INR10,483 crore.

• Return on Capital Employed (ROCE): 16.4%, a decline of 110 basis points quarter on quarter.

• Warning! GuruFocus has detected 5 Warning Signs with BOM:532626.

Release Date: October 17, 2024

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 strong revenue growth of 18.4% year on year and 2.4% quarter on quarter, driven by its digital portfolio.

• Digital revenues saw a significant increase of 52.4% year on year and 3.6% quarter on quarter, indicating robust demand for digital services.

• The company's order book increased by over 25% year on year, with the international region registering the highest quarterly order booking in the last five years.

• Tata Communications Ltd (BOM:500483) is making progress in asset monetization, with plans to sell a land parcel in Ambattur, Chennai, to unlock shareholder value.

• The company continues to expand its fiber network infrastructure in India, particularly in Tier 1 and Tier 2 towns, to meet the growing demand from large enterprises.

Negative Points

• Core connectivity growth was muted at 3% year on year, which is a concern as it accounts for 54% of the company's data revenues.

• EBITDA margins were impacted by expenses related to Red Sea cable cuts, resulting in a decline of 0.6% quarter on quarter.

• Interest costs increased due to higher short-term borrowings and a change in the mix of INR borrowings, affecting profitability.

• The media business experienced a quarter-on-quarter decline of 14.2% due to the sports calendar and large one-offs in the previous quarter.

• Working capital increased significantly, driven by higher receivables and changes in deal structures, impacting cash flow.

Q & A Highlights

Q: Can you elaborate on the hyperscaler and OTT contracts, particularly the 10-year deal mentioned? What growth can this deal bring, and what additional investments are required? A: The hyperscaler deal is part of ongoing efforts to build capacity for hyperscalers. These deals are not new, but demand has increased post-COVID. We don't disclose specific revenue impacts. Regarding Tier 2 and Tier 3 expansions, we've been increasing network capillarity steadily over the past four years, and this is included in our existing CapEx plans. - Amur Lakshminarayanan, CEO