Tata Communications profits hit by 22% fall in Q1 2017

Tata Communications profits hit by 22% fall in Q1 2017

Tata Communications has announced a drop in consolidated net profits in its financial results for Q1 that ended 30 June 2017.

The numbers indicate a solid and stable performance for the company, with growth across several areas but losses across its net profits and total income.

Vinod Kumar, managing director and chief operating officer of Tata Communications, said: “Digitalisation continues to create new avenues for growth across our entire business portfolio, and our investments in digital competencies hold us in good stead for the future. Having established a broad and deep portfolio that enables digital and global transformations, we are now pivoting our customer engagement around business themes rather than just technology.  We are also proactively investing into futuristic workflows and systems that will boost our productivity and enhance the customer experience. These investments will positively impact the medium to long term margins.”

According to the results, data services revenues grew by 4.6% year-on-year (YoY). In US dollar (USD) terms data revenue improved by 8.5% YoY. Growth services are growing at 25% YoY and traditional services improved by 7% YoY.

Earnings before interest, taxes, depreciation and amortization (EBITDA) QoQ was higher by 12.6%, having margins of 13%, up 140 bps (basis point).

Quarter on quarter (QoQ), core revenues grew by 0.4% reflecting the impact caused by currency translation. In USD terms, QoQ core revenues grew by 4.4%.

Interestingly, core revenues declined YoY, due in part to de-growth in the voice business as predicted by industry trends. 

After capital expenditure, interest and tax, Tata showed a free cash flow of INR 107 Crore or $17 million, which is a 45% increase YoY.

“Our free cash flow generation remains robust notwithstanding investments into new growth services and for our in-house business transformation projects. We are at the forefront of digital transformation and fully geared to capitalise on this opportunity,” said Pratibha Advani, chief financial officer of Tata Communications. 

Overall the company marked a 22.27% drop in its consolidated net profits at Rs 32.94 crore, having reported a net profit of Rs 42.38 Crore in the same quarter last year. Total income also experienced a decline of 4.34% reporting Rs 4,552.3 this quarter versus Rs 4,354.39 during the same period last year.

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