Analyst Concall
Tata Comm sees single-digit growth in core connectivity ops
This story was originally published at 17:46 IST on 18 July 2025
Register to read our real-time news.Informist, Friday, Jul. 18, 2025
Please click here to read all liners published on this story
--Tata Comm:Core connectivity ops sales remain affected by weak SAARC region
--CONTEXT: Tata Communications mgmt's comments in post-earnings analyst call
--Tata Communications: Continue to focus on improving profitability
--Tata Comm: Apr-Jun margin hit by decline in core connectivity ops sales
--Tata Comm: Saw payment delays, non-payments from SAARC clients in Apr-Jun
--Tata Communications: Sees mkt opportunities in data centre connectivity
--Tata Comm: Payment delays, non-payments from SAARC clients continue
--Tata Comm:See low-mid single digit growth in core connectivity sales ahead
--Tata Comm: Previous large deals to aid core connectivity sales going ahead
--Tata Comm: Share of global ops in Apr-Jun revenue higher vs domestic
--Tata Comm: Apr-Jun net debt increased due to investments in AI capex
--Tata Comm: Chose to not renew low-margin deals in Q1 to improve margins
--Tata Communications: See net debt declining from Oct-Dec
By Arya S. Biju and Narayana Krishna
MUMBAI/HYDERABAD – Tata Communications Ltd. expects to see low- to mid-single-digit growth in its core connectivity business going ahead, the management said in a post-earnings call with analysts. During the June quarter, the company's sales from the core connectivity business contracted 1.4% sequentially to INR 26.20 billion.
During the June quarter, the company's core connectivity business was hit by weakness in the South Asian Association for Regional Cooperation region, the management said. "So there have been payment delays as a result of which we have stopped doing business (with clients from the SAARC region). There are issues of non-payment. So a combination of many of these is what is hitting us."
The telecommunications company reported its June quarter earnings after market hours Thursday. Its consolidated net profit fell 82% on quarter to INR 1.90 billion, and its revenue fell 0.5% to INR 59.60 billion.
The company's earnings before interest, tax, depreciation, and amortisation margin for the quarter improved sequentially to 19.1% from 18.7%. The company attributed this improvement to the narrowed loss in its digital portfolio and better performance by its subsidiaries. This is in line with the company's boarder strategy to make its digital business profitable over the medium term, the management said. The faster growth in revenue from the company's international business over the domestic business also aided the company's margin for the quarter.
The company offers services under two main segments--voice solutions and data services. Revenue from the data services segment, which includes core connectivity services and digital platforms and connected services, rose 0.6% on quarter in Apr-Jun to INR 51.52 billion. The voice solutions sales rose over 5% on quarter to INR 3.95 billion.
However, the company's overall data EBITDA margin contracted 30 basis points to 17.2% in the reporting quarter because of a decline in core connectivity revenues, the management said. Going ahead, the company expects the large deals won in the core connectivity segment in previous quarters to boost the segment's revenue. "...last year in Q1 (Apr-Jun), we won a very large deal, one of the largest in the core connectivity space. And we will just be seeing the first revenues coming through in the later part of this year," it said.
The company will continue to focus on improving profitability and creating capacities across the organisation to capture future growth. "Multiple interventions undertaken in 2025-26 (Apr-Mar) allowed us to free up the balance sheet, enabling us to multiply resources to capture growth, and our focus remains intact," the management said. Further, the company moving across other non-short message service operations is expected to improve its profitability. During the June quarter, the company chose not to renew certain low-margin deals to focus on profitable growth, the management added.
The company had many data centre connectivity deal wins in the past, some of which are currently being implemented, the management said, and revenues from these will start coming in later in the financial year. Going forward, the company see more opportunities in this space.
On the company's net debt, the Tata Communications management said it rose in the June quarter owing to capital expenditure for artificial intelligence. The company expects its net debt to start declining from the December quarter.
Friday, shares of Tata Communications closed nearly 2% higher at INR 1,763.80 on the National Stock Exchange. End
Edited by Rajeev Pai
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (22) 6985-4000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2025. All rights reserved.
To read more please subscribe
Share this Story:
