Tata Communications , a global digital ecosystem enabler, has announced its financial results for the second quarter, showcasing robust growth in its data business and improved profitability margins. The company is also developing new AI-powered communication solutions.

Key Financial Highlights

• Consolidated revenue increased by 6.5% year-over-year to ₹6,100.00 crore
• Data revenue grew 7.3% year-over-year, with the digital portfolio expanding by 14.9%
• Data EBITDA margin improved to 18.6%, up 140 basis points sequentially
• Overall EBITDA rose by 3.9% year-over-year to ₹1,174.00 crore
• Profit After Tax (PAT) stood at ₹183.00 crore, down 27.0% year-over-year

Performance Overview

Tata Communications demonstrated strong momentum in the second quarter, particularly in its data services segment. The company's digital portfolio exhibited healthy double-digit growth, contributing significantly to the overall revenue increase.

Data Business Performance

The data business continued to be the primary growth driver for Tata Communications, with revenues reaching ₹5,179.00 crore in the current quarter. The sequential improvement in Data EBITDA margin by 140 basis points to 18.6% reflects the company's focus on operational efficiency and the strength of its core offerings.

Strategic Developments

A.S. Lakshminarayanan, MD and CEO of Tata Communications, highlighted significant wins in government projects, further solidifying the company's role in India's digital transformation. He also noted the successful launch and adoption of new products in strategic areas such as Voice AI and Cloud Networking.

In a recent conference call update, the company revealed that it is developing multi-channel orchestration capabilities. These new solutions include AI-powered options for switching between communication channels, demonstrating Tata Communications' commitment to innovation in the digital communications space.

Financial Outlook

Kabir Ahmed Shakir, Chief Financial Officer, expressed confidence in the company's growth trajectory and operational discipline. He anticipates that strategic investments will continue to enhance profitability and margin strength in the second half of the fiscal year.

Market Recognition

Tata Communications received several accolades during the quarter, including:

• Recognition as the Best UCaaS Provider in APAC at the UC Awards
• Gold Winner for Best IoT Device Management Platform at the Juniper Research Smart Cities & IoT Future Digital Awards
• 4-Star Business-Led Service Desk Maturity Rating for its digital customer engagement platform

These awards underscore the company's innovation and leadership in the digital communications space.

While the company faces challenges, as evidenced by the year-over-year decline in PAT, the management remains optimistic about future growth prospects. The focus on digital services, strategic investments, and the development of AI-powered multi-channel communication solutions positions Tata Communications to capitalize on the evolving needs of the global digital economy.

Tata Communications , a global digital ecosystem enabler, announced its financial results for the second quarter, showcasing a mixed performance with strong revenue growth but a decline in profitability.

Revenue Growth Driven by Digital Portfolio

The company reported consolidated revenues of ₹6,100.00 crore, marking a 6.5% year-over-year increase. This growth was primarily fueled by the company's data services segment, which saw a 7.3% year-over-year rise to ₹5,179.00 crore. Notably, the digital portfolio within data services exhibited robust growth of 14.9% compared to the same quarter last year.

Profitability Challenges

Despite the revenue growth, Tata Communications faced headwinds in profitability:

The company's profit after tax (PAT) decreased by 27% year-over-year to ₹183.00 crore, with the PAT margin contracting by 138 basis points to 3.0%.

Operational Highlights and Management Commentary

A.S. Lakshminarayanan, MD and CEO of Tata Communications, highlighted the company's sustained momentum, particularly in its digital portfolio. He stated, "We have sustained momentum this quarter, led by healthy double-digit growth in our digital portfolio. The period has also marked some significant wins in government projects, advancing our role in Digital India."

The company reported an improvement in Data EBITDA Margin, which rose by 140 basis points sequentially to reach 18.6%. This improvement reflects the company's focus on operational efficiency and the resilience of its core business.

Kabir Ahmed Shakir, Chief Financial Officer, expressed confidence in the company's strategic direction, noting, "As we enter the second half of the fiscal, we expect our strategic bets to further enhance profitability and margin strength. We remain confident in our ability to sustain growth, optimise capital efficiency and deliver long-term value for all stakeholders."

Strategic Initiatives and Product Launches

Tata Communications has been active in launching new products and securing partnerships:

• Introduction of a Voice AI Platform aimed at transforming customer journeys in the BFSI sector.
• Collaboration with Cisco to advance eSIM and IoT connectivity solutions.
• Partnership with Amazon Web Services to develop an AI-optimized network in India.
• Driving the pan-India launch of BSNL eSIM services.

Awards and Recognition

The company's efforts in innovation and workplace culture have been recognized through various awards:

• Named the Best UCaaS Provider in APAC at the UC Awards.
• Received the Gold Winner for Best IoT Device Management Platform at the Juniper Research Smart Cities & IoT Future Digital Awards.
• Recognized among the Top 100 'India's Best Companies to Work For' by Great Place To Work India for the 8th consecutive year.

Looking Ahead

While Tata Communications faces challenges in maintaining profitability, the company's focus on digital services and strategic partnerships positions it for potential growth. The management's emphasis on enhancing profitability and margin strength in the second half of the fiscal year will be crucial for addressing the current decline in profit margins.

Investors and stakeholders will likely be watching closely to see if the company's strategic initiatives and operational discipline can translate into improved bottom-line performance in the coming quarters.