Tata Communications has outlined its strategy to achieve profitable growth and EBITDA expansion for the current year. The company is focusing on revenue growth, an improved revenue mix, and operating efficiency to reach EBITDA positivity soon.

Strategic Focus Areas

The company has identified key opportunities in four primary segments: Network, Cloud, Infrastructure, and Interaction Fabric. These areas are central to its plan for sustainable growth and margin improvement.

Margin Outlook

Core connectivity margins for the quarter are estimated at 44.8%. The company expects these margins to remain stable, providing a solid foundation for its financial targets.

What the Numbers Show

The stability of core connectivity margins at 44.8% alongside the stated goal of EBITDA positivity suggests a strategic pivot toward higher-margin services and operational efficiency. By targeting specific growth verticals like Cloud and Interaction Fabric, the company aims to improve its overall revenue mix, which is critical for expanding EBITDA despite potentially flat core connectivity margins.

Tata Communications reported a consolidated net profit of ₹3,410 crore for the second quarter of FY27, marking an 86.2% increase from the ₹1,830 crore recorded in the corresponding period last year.

The company’s revenue stood at ₹6,688 crore, up 9.6% from ₹6,100 crore in the year-ago quarter. The profit figure exceeded the analyst estimate of ₹3,300 crore by ₹110 crore. Alongside the results, the Board approved the restructuring of its subsidiary Kaleyra and appointed Ms. Ridhi Sood as Company Secretary effective November 1, 2026. The earnings call recording for the quarter and half-year ended September 30, 2026, was uploaded to the company website on October 15, 2026, pursuant to SEBI regulations.

Financial Performance Overview

The following table summarizes the key financial metrics for Q2FY27:

Segment and Operational Highlights

Data revenue grew by 12.2% YoY to ₹5,810 crore, while digital platform revenue expanded by 18.6% YoY to ₹3,016 crore. The Digital Portfolio losses halved from the previous quarter, with margins improving to -3.6%. Absolute EBITDA growth of 21.2% outpaced topline growth, indicating significant margin expansion driven by operational discipline.

Digital Portfolio and Strategic Initiatives

The Digital Portfolio is on a clear path to breakeven, with margins improving from -9.7% in FY25 and -6.9% in Q1FY27 to -3.6% in Q2FY27. The absolute loss narrowed to ₹107 crore in Q2FY27, compared to ₹886 crore in FY25. This improvement underscores the effectiveness of strategic initiatives focused on driving profitability within the digital segment.

The company highlighted its focus on sovereign AI infrastructure, emphasizing secure, compliant data residency for enterprises. Through its Commotion platform, Tata Communications aims to build enterprise-wide context graphs that connect data and workflows, enabling AI agents to deliver specific business outcomes rather than generic responses.

Corporate Governance and Restructuring Updates

The Board of Directors agreed to move its full stake in Kaleyra Inc. to Tata Communications (Netherlands) B.V. (TCNL), a wholly owned subsidiary, to streamline the company structure. This intra-group transaction maintains overall ownership and interest without changing the ultimate beneficial ownership. The aggregate fair market value of the transferred shares is USD 92.625 million.

Additionally, based on the recommendation of the Nomination and Remuneration Committee, the Board appointed Ms. Ridhi Sood as the Company Secretary and Compliance Officer with effect from November 1, 2026. She succeeds Zubin Adil Patel, who signed the current regulatory filings.

What the Numbers Show

While revenue grew by approximately 9.6%, the net profit expanded by nearly 86%. This divergence indicates significant margin expansion or cost efficiencies during the quarter, as profitability grew at a rate roughly nine times faster than topline growth. The result also beat the consensus estimate of ₹3,300 crore by ₹110 crore. Notably, EBITDA margin expansion of 202 basis points to 21.3% was the primary driver behind the disproportionate rise in bottom-line profit. Furthermore, the narrowing of Digital Portfolio losses from -6.9% in Q1FY27 to -3.6% in Q2FY27 contributed directly to the improved EBITDA performance.