Tag: Tata Communications

Tata Communications confident of reaching 23% margin in two years

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Tata Communications’ margins have fallen to 20% over the past few years, but MD and CEO Amur S Lakshminarayanan is confident it will reach 23% in the next two years.

In an interview with CNBC-TV18, he shared that the company plans to strategically evaluate its subsidiaries to enhance margins and restore them to the 23-25% range over the next couple of years.

The company’s earnings before interest, tax, depreciation, and amortisation (EBITDA) margin declined to 20.2% in FY24 from over 25% in FY22.

In January-March 2024, the margin was down 160 basis points sequentially, and 410 basis points year-on-year (YoY). This was largely due to EBITDA losses in recently acquired US-based companies, Kaleyra and The Switch.

During the same period, the growth in data revenue, which accounts for nearly 82% of consolidated revenue, was also weak sequentially due to continued challenges from the global slowdown.

Lakshminarayanan said the company is on course with the ambition to double data revenue to ₹28,000 crore by FY27 from ₹14,000 crore in FY23.

Brokerage firm Kotak Securities, however, believes achieving both the revenue and margin targets is a tall ask.

Also Read | Tata Communications shares extend losses for eighth straight day, down over 5%

While there are still delays in new orders, Lakshminarayanan says their deal participation has improved significantly, which raises hopes they will be able to close large deals.

The company’s net debt to EBITDA also increased to 2.16 times due to the recent acquisitions.

However, Lakshminarayanan reiterated the aim to get the leverage to under 2 times in the near term without specifying a timeline. 

Also Read | Tata Communications sees slight dip in Q4 profit, declares dividend of ₹16.70 per share

The current market capitalisation of the company is ₹49,584 crore.

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Tata Communications shares extend losses for eighth straight day, down over 5%

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Tata Communications shares extended losses for the eighth consecutive day on Friday, April 19, 2024. The stock is also the top Nifty Midcap loser, trading over 5% lower around noon.

The stock has fallen around 14% in the last eight days. This is the stock’s longest losing streak since October 2023, when it was in the red consecutively from October 11 to October 26.

Kotak Institutional Equities has maintained a ‘sell’ rating on the Tata Communications stock reducing its fair value to ₹1,525 from the previous ₹1,595.

It says the company’s organic data revenue growth further moderated to 4.8%. This is on the back of continued headwinds from the global slowdown. The company’s management has indicated that the funnel remains robust, but order booking has been weaker than expected on global headwinds and delayed decision making.

The company’s margin have declined 160 basis points from the previous quarter and are down 410 bps from the previous year. The company’s management expects the margin to recover in the present fiscal year. It has reiterated its ambition of doubling data revenue for FY27 and getting back to 23-25% EBITDA margin in the medium term. The brokerage says both these ambitions remain a tall ask.

The company’s EBITDA% came in at 18.56% in the March quarter. It was between 22% to 25.5% in the last three quarters of the previous fiscal.

The company reported its quarterly results earlier this week. It witnessed a 1.5% dip in net profit at ₹321.2 crore in the March quarter, compared to the previous year’s ₹326 crore.

Revenue from operations increased 24.6% to ₹5,691.7 crore against ₹4,568.7 crore in the corresponding period of the preceding fiscal.

At the operating level, EBITDA rose 2.1% to ₹1,056.3 crore in the fourth quarter of this fiscal over ₹1,034.3 crore in the corresponding period in the previous fiscal. EBITDA margin stood at 18.6% in the reporting quarter compared to 22.6% in the corresponding period in the previous fiscal. EBITDA is earnings before interest, tax, depreciation, and amortisation.

The company’s board of directors recommended a final dividend of ₹16.7 apiece, with a face value of ₹10 each, for FY24. The dividend, if approved by the shareholders at the ensuing annual general meeting, will be paid to the eligible shareholders after the meeting’s conclusion.

The company’s consolidated revenue for the fiscal year increased 17.5% to ₹20,969 crore. The data revenue crossed the ₹17,000-crore mark, growing 21.9% on a full-year basis. The digital portfolio witnesses broad-based growth across all offerings, improving 55.4% on a full-year basis.

The stock was trading 5.16% at ₹1,758.7 apiece at 12.05 pm on April 19. The stock is down 7.84% in the past month. However, it has gained 47.53% in the past year.

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Tata Communications sees slight dip in Q4 profit, declares dividend of ₹16.70 per share

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Tata Communications Ltd on Wednesday (April 17) reported a 1.5% year-on-year (YoY) dip in net profit at ₹321.2 crore for the fourth quarter that ended March 31, 2024.

In the corresponding quarter, Tata Communications posted a net profit of ₹326 crore, the company said in a regulatory filing. Revenue from operations increased 24.6% to ₹5,691.7 crore against ₹4,568.7 crore in the corresponding period of the preceding fiscal.

At the operating level, EBITDA rose 2.1% to ₹1,056.3 crore in the fourth quarter of this fiscal over ₹1,034.3 crore in the corresponding period in the previous fiscal. EBITDA margin stood at 18.6% in the reporting quarter compared to 22.6% in the corresponding period in the previous fiscal. EBITDA is earnings before interest, tax, depreciation, and amortisation.

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The board of directors has recommended a final dividend of ₹16.70 per share (face value of ₹10 each) for the financial year ended March 31, 2024. This dividend, upon approval of the shareholders at the ensuing annual general meeting (AGM), shall be paid to eligible shareholders after the AGM’s conclusion, the company said.

The company’s consolidated revenue for the year climbed 17.5%, coming in at ₹20,969 crore. The data revenue crossed the ₹17,000-crore mark, growing 21.9% on a full-year basis. The digital portfolio witnesses broad-based growth across all offerings, improving 55.4% on a full-year basis.

A.S. Lakshminarayanan, MD and CEO of Tata Communications, said, “We are pleased to report the significant revenue milestone of ₹20,000 crore. We closed FY24 with strong execution and our digital fabric is witnessing increased relevance from enterprise customers. As we enter the next fiscal, our firm focus will remain on integrating our acquisitions, executing our strategies, and driving sustainable and profitable revenue growth.”

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Shares of Tata Communications Ltd ended at ₹1,884.05 on Tuesday (April 16), down by ₹25.15, or 1.32%, on the BSE.

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Tata Communications okays slump sale of digital services business to subsidiary Novamesh

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Tata Communications Ltd on Thursday (March 21) said it has approved the proposal to hive off its digital services business to its wholly-owned subsidiary, Novamesh Ltd.

“The Board of Directors of Tata Communications Limited (Company), at its meeting held today, has approved the proposal to enter into a business transfer agreement (Agreement) for the hive-off of the company’s identified new edged digital services business (‘identified business undertaking’) to its wholly owned subsidiary, Novamesh Limited (Novamesh) as a going concern on ‘slump sale” basis,” the company stated in a stock exchange filing.

The transaction, structured as a slump sale, is subject to various conditions precedents and regulatory approvals. The identified business undertaking, which contributed a turnover of ₹638.71 crore and has a net worth of ₹457.90 crore as of December 31, 2023, will be transferred to Novamesh as a going concern.

The sale consideration is set at ₹458 crore, subject to final adjustments, and it is expected to be closed by June 30, 2024. The effective date of the slump sale is anticipated to be April 1, 2024.

Novamesh Ltd, being a wholly-owned subsidiary of Tata Communications, ensures continuity in operations and maintains the consolidated financial status of the company.

The transaction, falling within the ambit of related party transactions, has been executed at arm’s length pricing principles and approved by the Audit Committee of Tata Communications.

While Tata Communications is primarily engaged in providing telecommunications services, Novamesh is newly incorporated and authorised to provide information technology-enabled and related services.

Shares of Tata Communications Ltd ended at ₹1,908.30, up by ₹20.50, or 1.09%, on the BSE.

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Tata Power surges on inking pact with Tata Communications to set up solar plant

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Tata Power Company Ltd shares gained 2% on Wednesday after the company announced that its renewable energy arm has signed an agreement worth ₹105 crore with Tata Communications for setting up an AC group captive solar plant of 18.75 Mega Watt (MW) capacity.

In a filing to the stock exchanges, Tata Power said that its subsidiary, one of the largest integrated power companies in India, Tata Power Renewable Energy Ltd (TPREL) has signed a power delivery agreement with Tata Communications.

The said solar plant project has been facilitated through a special purpose vehicle (SPV), Nivade Windfarm Ltd, which has acquired an estimated order worth ₹105 crore. The solar plant is located in the Aachegaon village of Maharashtra and is expected to generate nearly 40 MUs of power. The plant is also expected to offset over 30,000 tonnes of carbon dioxide emissions in a year.

Tata Communications reaffirms its commitment to environmental responsibility, along with adopting eco-friendly energy alternatives, by bringing into account renewable energy sources in its energy consumption mix, the company said.

“Our customised green energy solutions such as Group Captive Solar will not only reduce operating costs but also increase energy efficiency, thus paving the way for a sustainable and future-ready sector,” said the CEO and Managing Director of Tata Power Renewable Energy Ltd, Deepesh Nanda.

According to Manoj Tripathy, Vice President of Corporate Services at Tata Communications, the initiative with TPREL sets a formidable example for the transition towards a greener future. “It is a resolute pledge towards fostering a cleaner, more sustainable path for the future of commtech,” he added.

Shares of Tata Power ended 2.5% higher at ₹374.10 per piece on NSE.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Tata Communications partners with Microsoft to boost voice calling on Teams

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Tata Communications, a leading global commtech player, has announced a strategic partnership with Microsoft aimed at providing enhanced flexibility in collaboration and connectivity for enterprises in India. This collaboration seeks to empower businesses by leveraging Microsoft Teams along with Tata Communications’ GlobalRapide platform, it said in a statement.

The partnership aims to offer seamless integration of carrier-grade PSTN voice calls on Microsoft Teams devices for both Indian enterprise users and multinational corporations operating in the country.

By leveraging the Operator Connect platform, users will be able to make and receive calls from anywhere across the globe, ensuring enhanced connectivity and collaboration capabilities, it said.

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Tata Communications’ reach across more than 190 countries, coupled with partnerships with over 700 mobile network operators, uniquely positions them to deliver regulatory compliant cloud calling and audio-conferencing services, it added.

This initiative is expected to provide greater fraud prevention capabilities and ensure adherence to local market regulations, enabling businesses to securely interact and collaborate with their global value chains.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

JLR and Tata Communications bolster partnership to drive digital change

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Jaguar Land Rover (JLR) on Tuesday announced the strengthening of its partnership with Tata Communications for future-proof digital transformation at the British automobile manufacturer’s sites spread across the globe.

The latest partnership will power the production of JLR’s next-generation vehicles, a key part of its re-imagine strategy, and provide the connectivity foundation for the next phase of digital transformation for the organisation, the automaker said in a statement.

As part of the tie up, Tata Communications will deploy its cloud-first, software-defined wide area network (SD-WAN) technology, connecting all JLR’s 128 sites worldwide, it added.

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This advanced global connected capability between JLR’s global HQ and its plants, warehouses, sales centres, data centres and cloud services, will significantly boost supply chain efficiency and security, the Tata Motors-owned automaker said.

The transformation will enable JLR to bring in AI-powered and real-time data capturing, monitoring and analysis to improve production line performance, it stated.

Further, the partnership will significantly shorten the time to upgrade manufacturing processes, strengthen operational resilience and increase agility to meet production demands, JLR said.

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”The connectivity platform will help us build the world-class ecosystem we need to deliver modern luxury vehicles and remarkable driving experiences,” JLR Group Chief Digital and Information Officer Tony Battle said.

Tata Communications Executive Vice President and Chief Sales & Marketing Officer Sumeet Walia said the company is deploying a ’digital fabric’, comprising its agile infrastructure, platforms and managed services, that will help integrate JLR’s systems, workforce, suppliers, stakeholders and customers across the globe, delivering a seamless flow of data to enrich key aspects of the business ecosystem.

JLR and Tata Communications have been in a long-standing partnership.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Singapore Airlines picks Tata Communications to enhance customer experience, employee productivity

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Tata Communications on Tuesday announced a multi-year agreement with Singapore Airlines to transform the latter’s communications and collaboration tools for better employee productivity and an enhanced user experience.

The company and Singapore Airlines have been working together for the last five years, the former said in a stock exchange filing, adding that the Tata Communications IZO SDWAN enables Singapore Airlines with intelligent customer call routing to their global customer service centres.

Additionally, Tata Communications MOVE powers the airline’s pilot and cabin crew collaboration platforms. “MOVE global intelligent cellular connectivity facilitates a swift and secure exchange of critical flight and passenger data on pilots and crew tablets, leading to expedited flight turn-round and enhanced on-time performance while achieving significant cost savings compared to a traditional data roaming solution,” the exchange filing stated.

Last week, CNBC-TV18 reported that Scoot, the low-cost subsidiary from the Singapore Airlines stable, could expand its list of destinations in India. At present, the airline operates from six cities in India — Chennai, Amritsar, Coimbatore, Tiruchirappalli, Thiruvananthapuram and Visakhapatnam.

Tata Communications reported a 58% decline in its net profit at ₹221.3 crore for the September quarter. In the corresponding quarter last year, Tata Communications posted a net profit of ₹534.26 crore, the company said in a regulatory filing. A CNBC-TV18 Poll had predicted a profit of ₹325 crore for the quarter under review.

The total revenue in the second quarter e stood at ₹4,872.5 crore during the period under review, up 10% against ₹4,430.74 crore in the corresponding period of the preceding fiscal. CNBC-TV18 Polls had predicted revenue of ₹4,860 crore for the quarter under review.

Shares of Tata Communications were trading 0.7% lower at ₹1,724.45 apiece.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Tata Communications targets 23-25% margin in medium term

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Amur S Lakshminarayanan, the Managing Director and CEO of Tata Communications is confident the company will be able to restore its core business margins to the 23-25% range in the medium term.

He said Kaleyra has a negative EBITDA (earnings before interest, tax, depreciation, and amortisation), which will weigh on margins. However, he expects Kaleyra to turn around in a year.

In June this year, Tata Communications acquired Kaleyra Inc, a US-based company listed on the New York Stock Exchange, in an all-cash deal. The agreement specified a price per share of $7.25, resulting in a total consideration of approximately $100 million, inclusive of the assumption of all outstanding debt, as outlined in an exchange filing.

Kaleyra is a global omnichannel integrated communication services provider with a set of proprietary platforms, offering targeted personalisation through messaging, video, push notifications, e-mail and voice-based services, and chatbots.

Other factors that affected margins for the quarter were investments in human resources, mergers and acquisitions, and consolidation of its earlier acquisition, Switch Enterprises. He expects Switch also to turnaround in the coming year.

Tata Communications (Netherlands) B.V., a wholly-owned indirect subsidiary of Tata Communications had acquired a 100% stake in Switch Enterprises LLC. in December 2022 for a total cash consideration of $58.8 million or Rs 486.3 crore.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow