Tata Communications' Q3 net profit zooms manifold to Rs 257 crore
Part of the Tata Group, the company provides core and next-gen connectivity, cloud hosting, security solutions, and media services.
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Tata Communications on Wednesday posted a multi-fold growth in its consolidated net profit for just-ended December quarter to Rs 257 crore as compared to Rs 45 crore logged in the same period the previous year, which included the effects of a one-time provision.
The company said that the Q3FY24 numbers had included both continued and discontinued operations.
Tata Communications' MD and CEO A S Lakshminarayanan said he is optimistic about business prospects based on tech transformations and the need for companies to leverage AI and other technology initiatives.
Part of the Tata Group, the company provides core and next-gen connectivity, cloud hosting, security solutions, and media services.
The gross revenue for Q3FY25 stood at Rs 5,798 crore, 2.9 per cent higher than the corresponding quarter of the previous fiscal.
"Q3 has been a satisfactory quarter with strong growth in digital revenues, improved margins, and enhanced free cash flow. We are advancing well in our review of subsidiaries, with a clear focus on optimising their performance and unlocking value, as demonstrated in the case of Tata Communications Payments Solutions Limited," Lakshminarayanan said.
He further said that in the world of AI, digital infrastructure will be even more critical and added that the company's investments in the "digital fabric" will hold it in good stead.
Kabir Ahmed Shakir, Chief Financial Officer of Tata Communications, said: "The strategic actions to streamline and make our business future-ready has begun paying off. Over and above the divestiture of our payment solutions business, we continue to pursue other monetisation opportunities and strategic evaluation of assets." In November last year, Tata Communications divested its entire 100 per cent stake in its ATM business TCPSL (Tata Communications Payment Solutions Ltd) in a Rs 330- crore deal.
The company explained that the Q3 FY24 net profit of Rs 45 crore was after considering a one-time provision of Rs 185 crore towards income tax, basis a Supreme Court ruling on the nature of licence fee as capital in nature and not revenue expenditure.
"...In this whole (fiscal) year so far...The core connectivity growth is somewhat muted because of the number of cable cuts that we had...But despite that we've been able to get our margins onto a proper trajectory because of more disciplined execution on all the digital products and the company in terms of management of its costs," Lakshminarayanan told PTI.
He said the company expects a healthy order booking -- like that of Q1 and Q2 -- to reflect in the upcoming quarters.
Asked about the outlook, he said that while the company does not provide guidance, digital and AI imperatives are a positive. The uncertainties of geopolitical nature continue but overall the business sentiment has been fairly steady, particularly in the Western markets, he pointed out.
"Discretionary spends appears to be going up...From a business standpoint, we have a lot of optimism because we continue to strongly believe that customers eventually have to transform their digital infrastructure to really capitalise on AI and other technology initiatives...We believe that we are investing in the right places and we will have the right outcomes from that," Lakshminarayanan said.
Further, while one-third of the company's revenue comes from the US, the CEO said the company's business model does not rely so much on movement of people between the countries.
"The teams are split between the US and India, so we have a very good model, and, it is somewhat insulated. We are not dependent on so much of people movement between the countries for our business model, so I would see this as a good opportunity for us to further expand as opposed to having any concerns on this matter," he said.
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08:47 PM IST