Tata Communications: Tata Communications’ overseas revenues continue to outgrow India: CEO

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Tata Group’s telecom, cloud and media arm Tata Communications’ overseas revenues have continued to outgrow its India revenues for three consecutive quarters and hold a 58:42 ratio as of end-June 24, chief executive AS Lakshminarayanan told ET.

“In the US and European markets, we are a challenger, so there is a much bigger white space for us to chase and that’s why two years ago we started making all these investments in sales and marketing and our products. All of that has started to pay dividends, and we are happy to see the results,” the executive said in a virtual conversation after the company declared its first quarter FY25 earnings.

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Meanwhile, in India, we are already a leader, our ambition is to maintain the leadership position and grow the India business, he added.

For the April-June 2024 period, the company reported a 12.78% decline in net profit to Rs 332.93 crore for Rs 381.75 crore from a year ago. On-quarter basis the profit was up 3.54% from Rs 321.52 crore posted in the March-end quarter.

“Our subsidiaries, TCTS, the transformation service, the ATM business, had a drag on profitability and we consolidated those. Secondly, last year we did two large M&A transactions so we incurred expenses related to due diligence, consultant fees etc. And the third is, these acquisitions were not profitable which had a dilutive effect on the EBITA,” Lakshminarayanan said.

Last year, Tata Communications had acquired New York-based video production and distribution company The Switch Enterprises LLC and communications platform Kaleyra.

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While the acquisitions have added margin pressure to the company’s profitability, the chief executive expects both businesses to turn profitable next year.Tata Communications’ Board, on Thursday, approved a proposal to raise Rs 2,000 crore via issuance of non-convertible debentures on private placement basis.

This is being done to refinance some upcoming loans and is business as usual, he said. “We are not going to use these funds for any capex or new investments.”

Separately, the Board also approved an investment of $26.8 million (Rs 223.44 crore) in its step down wholly owned subsidiary Tata Communications (UK) Limited (TC UK).

“The proposed investment is intended to simplify the existing group structure of the Company and its subsidiaries by moving TC UK under direct ownership of the Company,” as per exchange filings.

“This is part of our global restructuring plan to ensure that all subsidies are parented properly,” Lakshminarayanan said. “We announced the same for Switzerland and Bermuda recently. We are doing this to become more efficient from a tax standpoint and become more efficient for some future acquisitions.”

During the first quarter of fiscal 2025, Tata Communications’ income from operations stood at Rs 5,659.71 crore having increased 14.1% on-year comparison, but decreased 1.55% sequentially. It also reported an exceptional gain of Rs 85.71 crore.

The company’s data services revenue, which forms 90% contribution, was marginally higher by 0.82% and stood at Rs 4,709.31 crore. Further, increasing network and transmission expenses, employee costs and finance costs in the said quarter continued to put downward pressure on revenues and profitability.

On Thursday, shares of Tata Communications closed 0.76% higher on the BSE at Rs 1,865. Results were declared after market hours.

The company also announced grant of 34,707 employee stock options to eligible employees at a face value of Rs 10.



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Tata Communications: Tata Communications’ overseas revenues continue to outgrow India: CEO


Tata Group’s telecom, cloud and media arm Tata Communications’ overseas revenues have continued to outgrow its India revenues for three consecutive quarters and hold a 58:42 ratio as of end-June 24, chief executive AS Lakshminarayanan told ET.

“In the US and European markets, we are a challenger, so there is a much bigger white space for us to chase and that’s why two years ago we started making all these investments in sales and marketing and our products. All of that has started to pay dividends, and we are happy to see the results,” the executive said in a virtual conversation after the company declared its first quarter FY25 earnings.

Elevate Your Tech Prowess with High-Value Skill Courses

Offering College Course Website
Indian School of Business Professional Certificate in Product Management Visit
Indian School of Business ISB Product Management Visit
MIT xPRO MIT Technology Leadership and Innovation Visit

Meanwhile, in India, we are already a leader, our ambition is to maintain the leadership position and grow the India business, he added.

For the April-June 2024 period, the company reported a 12.78% decline in net profit to Rs 332.93 crore for Rs 381.75 crore from a year ago. On-quarter basis the profit was up 3.54% from Rs 321.52 crore posted in the March-end quarter.

“Our subsidiaries, TCTS, the transformation service, the ATM business, had a drag on profitability and we consolidated those. Secondly, last year we did two large M&A transactions so we incurred expenses related to due diligence, consultant fees etc. And the third is, these acquisitions were not profitable which had a dilutive effect on the EBITA,” Lakshminarayanan said.

Last year, Tata Communications had acquired New York-based video production and distribution company The Switch Enterprises LLC and communications platform Kaleyra.

Discover the stories of your interest


While the acquisitions have added margin pressure to the company’s profitability, the chief executive expects both businesses to turn profitable next year.Tata Communications’ Board, on Thursday, approved a proposal to raise Rs 2,000 crore via issuance of non-convertible debentures on private placement basis.

This is being done to refinance some upcoming loans and is business as usual, he said. “We are not going to use these funds for any capex or new investments.”

Separately, the Board also approved an investment of $26.8 million (Rs 223.44 crore) in its step down wholly owned subsidiary Tata Communications (UK) Limited (TC UK).

“The proposed investment is intended to simplify the existing group structure of the Company and its subsidiaries by moving TC UK under direct ownership of the Company,” as per exchange filings.

“This is part of our global restructuring plan to ensure that all subsidies are parented properly,” Lakshminarayanan said. “We announced the same for Switzerland and Bermuda recently. We are doing this to become more efficient from a tax standpoint and become more efficient for some future acquisitions.”

During the first quarter of fiscal 2025, Tata Communications’ income from operations stood at Rs 5,659.71 crore having increased 14.1% on-year comparison, but decreased 1.55% sequentially. It also reported an exceptional gain of Rs 85.71 crore.

The company’s data services revenue, which forms 90% contribution, was marginally higher by 0.82% and stood at Rs 4,709.31 crore. Further, increasing network and transmission expenses, employee costs and finance costs in the said quarter continued to put downward pressure on revenues and profitability.

On Thursday, shares of Tata Communications closed 0.76% higher on the BSE at Rs 1,865. Results were declared after market hours.

The company also announced grant of 34,707 employee stock options to eligible employees at a face value of Rs 10.



Source link

Disclaimer

We strive to uphold the highest ethical standards in all of our reporting and coverage. We StartupNews.fyi want to be transparent with our readers about any potential conflicts of interest that may arise in our work. It’s possible that some of the investors we feature may have connections to other businesses, including competitors or companies we write about. However, we want to assure our readers that this will not have any impact on the integrity or impartiality of our reporting. We are committed to delivering accurate, unbiased news and information to our audience, and we will continue to uphold our ethics and principles in all of our work. Thank you for your trust and support.

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