Tata Communications’ data business continues to drive positive momentum

Tata Communications has announced its financial results for the quarter ended June 30th 2016 (Q1 FY17).

Highlights | Q1 FY2017

·        Consolidated EBITDA grew by 18% YoY to INR 863 crores for the quarter with a 307 bps improvement in YoY EBITDA margins on the back of strong performance by Data services and aided by Voice.

·        Core business (consolidated numbers excluding Neotel) registered a growth of 2% in revenues YoY while EBITDA increased by 32% to INR 786 crores. This growth continues to be driven by the Global Data business which registered a growth of 14% in revenues and 42% in EBITDA YoY.

In line with our strategy, revenue and EBITDA have shown a healthy trend over the last few quarters. We are seeing a clear shift in our business mix with revenue from Data services contributing 56% to gross revenue and 78% to EBITDA.

Productivity initiatives coupled with stability in volumes are leading to an improvement in Voice EBITDA, with a quarter-on-quarter improvement of 70 bps in margins.

We continue to generate healthy free cash flow. The free cash flows (EBITDA minus Capex) from the Core business for Q1 FY17 came at INR 346 crores (USD 52 Mn) and represent a growth of 31% on a YoY basis.

Commenting on these Q1 FY17 results, Vinod Kumar, MD and CEO, Tata Communications, said:

“We see ourselves as enablers in a world where businesses are accelerating their digital transformation and creating a platform economy. It is our intent to provide tailored solutions such as connectivity, cloud and mobility to enterprises in a secure and reliable manner. The layer of value-added services that sits above our world-leading infrastructure is driving the transformation of our business.”

“We have also seen a healthy accretion in both Global Enterprise and NextGen customers. This is important as these are the cornerstones for our future growth. As we evolve with macro-trends like IoT, Big Data and Artificial Intelligence (AI), the business is geared to deliver a steady enhancement in performance going forward. And as seen in this quarter, we are seeing a consistent directional improvement in Global Data services.”

Commenting on these results, Pratibha K Advani, CFO, Tata Communications, said:

“We are making positive strides in improving the quality of our earnings and showing consistent growth. Both the divestiture of Neotel and the strategic joint venture partnership announcement of our India and Singapore Data Centres give us headroom to operate more effectively in a highly-competitive environment.”

“We are committed to driving efficiency of capital utilisation and this is reflected in the improvement in our Return on Capital Employed for our Core business from 8.6 % in FY16 to 10.1 % at the end of Q1 FY17.” 

Business highlights | Q1 FY17

·         Tata Communications expands flagship IZO™ cloud enablement platform with new storage service portfolio: IZO™ Cloud Storage is designed to address enterprises’ complex storage demands, in keeping with the increase in volume of unstructured data. The solution aims to support enterprises’ hybrid cloud adoption by combining network connectivity, cloud storage and data security.

·         Mobile network operators can now offer their customers Wi-Fi® calling, messaging and Internet access – both at home and abroad: Tata Communications has launched Wi-Fi+, a new Wi-Fi® cloud communication solution, which enables mobile network operators’ customers to access the internet for calling, messaging, and data applications more seamlessly than ever.

Corporate highlights | Q1 FY17

·         ST Telemedia and Tata Communications enter into a strategic partnership to expand data centre business in India and Singapore: Singapore Technologies Telemedia (ST Telemedia), a strategic global investor focused on the communications, media and technology sectors, and Tata Communications, a leading global communications provider, today announce that they have entered into definitive agreements whereby ST Telemedia, through ST Telemedia Global Data Centres (STT GDC), will upon closing of the transaction acquire a 74% majority stake in Tata Communications’ data centre business in India and Singapore. Tata Communications will remain as a significant shareholder, holding the remaining 26% stake in the businesses. 

·         Liquid Telecom and RBH announce agreement to acquire Neotel: Liquid Telecom, a privately owned, pan-African telecoms group, majority owned by Econet Wireless Global, announces that it has entered into an agreement to acquire South African communications network operator Neotel.