Tata Communications Q1: Net profit down 30% YoY, revenue up 11%

economictimes.indiatimes.com:

Tata Communications reported a 29.8% dip in net profit on-year to Rs 382 crore for the first quarter led by cost pressures and change in business mix, the company said Wednesday. The pressure on profits was led by a higher mix of digital portfolio of services instead of core connectivity solutions, AS Lakshminarayanan, managing director at Tata Communications, told ET. Speaking about the general investment sentiments, Laxminarayan said that barring the India market, there is a level of caution across the board.

“All markets there is some caution, especially in Europe, US; a little bit more in the US.” “So we've added a lot of deals into the pipeline this quarter. But the closure time is getting elongated compared to the previous quarter,” he said, adding that the company continues to see robust client additions despite delays.Revenue for the quarter ended on June 30 stood at Rs 4,711 crore, up 10.7% over the previous year. Sequentially, profit grew 17.1% and revenue was up 4.4%.

The data business, which is the largest business segment, grew to Rs 3,912 crores during the quarter, registering a growth of 17.1% on year. As the acquisition of Switch was completed in this quarter, the data services revenue included two months of revenue from The Switch Enterprises LLC. Data services includes core and nextgen connectivity services, digital portfolio and connected services.

The digital portfolio consists of cloud and security, managed CPaaS (communication platform as a service) and media among other solutions. “Core connectivity is a business that has higher capex and net revenue. But the digital portfolio has very different characteristics with lower capex and lower margins.