Tata Communications today announces its financial results for the quarter ended September 30th, 2019

Highlights | Q2 FY2020

Data services portfolio

• Strong growth in Data business; revenue grew by +10.7% YoY on the back of robust performance in Traditional services and Transformation services portfolio, despite industry headwinds
• Data EBITDA was at INR 752.4 crore (USD 106.8 Mn); up +40.0% YoY led by strong growth in Traditional services and profitable gain in Growth services^[1]
• Traditional services^[2] saw a robust growth in revenue and profitability; revenue grew by +7.2% YoY and EBITDA grew by 40.0% YoY with margins at 37.8%. Within this portfolio, the India business has regained momentum after being affected by operator consolidation last year
• Growth services continue to scale and witness profitable growth; revenue grew by +13.7% YoY. We are witnessing operating leverage in this portfolio; EBITDA grew by +33.2% QoQ with a margin expansion of 90 Bps

Consolidated financial highlights

• Consolidated revenue was at INR 4,273 crore (USD 607 Mn); growth of +5.0% YoY on the back of continued improvement in Data business
•  Consolidated EBITDA at INR 833.7 crore (USD 118.4 Mn); increase of +32.3% YoY on the back of strong growth in Traditional services and margin expansion in Growth services
• Consolidated PAT at INR 53.9 crore (USD 7.6 Mn) as compared to a profit of INR 1.6 crore (USD 0.4 Mn) in Q2 FY19
• CAPEX for this quarter was USD 65 Mn as compared to USD 45 Mn in Q1 FY20

“As the market continues to evolve at an unprecedented rate, the need to accelerate digital transformation across all layers of the enterprise is the reality businesses face to remain competitive today. Our focus on providing digital infrastructure solutions that align with this customer need is showing results. This is evident in the growth and profitability of our Data business which now drives 79% of business revenues. By being a part of our customers’ digital journeys, we remain committed to steering the business towards sustainable profit and ultimately, demonstrable stakeholder value.”

A.S Lakshminarayanan, MD and CEO - Designate, Tata Communications

Commenting on the results, Pratibha K. Advani, Chief Financial Officer, Tata Communications, said, “We have witnessed a robust trend over last few quarters with strong financial performance delivered across all key parameters. Our Data business has continued to witness strong performance in revenue as well as profitability, despite industry headwinds. We have a strong order book and we expect this trend to continue as we keep executing on large deals.

Communication infrastructure needs of enterprises have evolved and digital transformation is the focus area. Robust growth in our Enterprise business of 10.8% shows that we have established ourselves as a preferred digital transformation partner.”

An investor fact sheet providing detailed analysis of the results for the quarter ended September 30th, 2019 has been uploaded on the Tata Communications website and can be accessed here.

Business highlights | Q2 FY2020

Awards

• Tata Communications named Asia-Pacific Managed SD-WAN Service Provider of the Year by Frost & Sullivan
• Tata Communications named a finalist in the 2019 Microsoft Intelligent Communications Partner of the Year Award. The company was honoured among a global field of top Microsoft partners for demonstrating excellence in innovation and implementation of customer solutions based on Microsoft technology
• Great Place to Work®: India’s Best Workplaces for Women 2019
• Aon Best Employers India 2019
• 2019 Golden Bridge Award: Winner, Gold – Company of the Year | Telecommunications, for developing a unique proposition and distinct voice for the company in the B2B and B2B2C IoT market in India

Partnerships

• Cisco and Tata Communications: Tata Communications and Cisco expanded their partnership to offer enterprises a secure, fully-managed, multi-channel, intelligent and cloud-based Cisco Webex Contact Center solution. This joint offering is an end-to-end managed solution with global reach enabled by Tata Communications’ global digital infrastructure and managed services expertise, which companies of all sizes can now leverage for competitive advantage.
• Microsoft and Tata Communications: Tata Communications expanded its global relationship with Microsoft with the addition of managed services capability for Azure Virtual WAN. Enterprises worldwide can now combine IZO™ Internet WAN with the Microsoft global network to connect employees seamlessly and securely to cloud-based applications and data through the new managed service. Through the IZO™ SDWAN service, enterprises can gain greater visibility and control over this hybrid network infrastructure. Tata Communications is one of the first partners to leverage a new Azure Service Provider Management Toolkit, launched at Microsoft Inspire, as part of the Azure Networking Managed Services Partner (MSP) Program
• Thales and Tata Communications: Thales, a global leader in digital security, and Tata Communications are working together to develop a secure global IoT connectivity solution. Tata Communications MOVE™ mobility and IoT platform and Thales’s T-Sure warranted digital identity offering is set to unlock the value in data generated by connected devices such as cars and trucks, whilst maintaining the integrity and security of IoT data
• CreditPilot and Tata Communications: CreditPilot, a financial technology company specialising in digital and mobile financial services, transactional and payment infrastructure, and Tata Communications have come together to offer mobile and digital financial services solutions to mobile operators. Under the terms of a joint Engagement Agreement (EA), Tata Communications and CreditPilot will form a joint task force to assess the integration of the provision of financial services with the Tata Communications MOVE™ – Mobile Virtual Network Operator Enabler (MVNE) platform
• Hedera Governing Council: Tata Communications joined the Hedera Governing Council, an enterprise-ready distributed ledger platform which comprises up to 39 multinational entities from a diverse array of industries
• Tata Communications and Neeco: Neeco Global ICT Services, a leading global provider of complex ICT services announced that it is now a customer of Tata Communications and will deliver Internet of Things (IoT) services for enterprises in Europe
• Focus Softnet and Tata Communications: Focus Softnet, a leading software development and enterprise applications provider, has partnered with Tata Communications to host its cloud-based ERP solutions on Tata Communications’ IZO™ Private Cloud platform

New launches

• Tata Communications’ NetFoundry: NetFoundry™, a software and business developed as part of Tata Communications’ Shape the Future innovation and entrepreneurship programme, was officially launched as an independent subsidiary within the Tata Communications Group. NetFoundry passed the $1 million USD annual recurring revenue (ARR) milestone in less than two years of selling its services, growing ARR by over 50% on a quarter-over-quarter basis for the past three quarters. Through this spin-off, Tata Communications aims to help the North Carolina-based company to accelerate its growth further
• The European Tour Innovation Hub: The European Tour and Tata Communications launched an innovation contest that calls on start-ups around the world to develop creative new solutions and concepts to enhance the game of golf. The European Tour Innovation Hub with Tata Communications aims to find ideas that can be developed commercially with support from the Tour’s business development team, venture capital (VC) firms and Tata Communications with the winning solution tested in action during the 2020 season

CSR

• DRIVE week, Tata Communications’ company-wide tools-down day that unites employees across geographies to serve the common goal of giving back to society, saw 7,700 volunteers this year; contributing a cumulative of 44,238 hours of volunteering and touching 47,139 lives across countries. DRIVE week is a movement at Tata Communications that focuses on a clear strategic objective of serving the communities in which we operate

Leadership update

• On October 3rd 2019, Tata Communications announced that it has appointed Mr. Amur Swaminathan Lakshminarayanan as the Managing Director and Group Chief Executive Officer (MD & CEO) – Designate of the company

[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