PAT of INR 1.6 crore compared to loss of INR 59 crore in Q1 | Net Debt reduction of USD 17 Mn

Tata Communications today announces its financial results for the quarter ended September 30^th, 2018.

Highlights | Q2 FY2019

• Consolidated revenue grew sequentially by 3.2% QoQ, led by strong growth in Data Services.
• Data business revenues grew by 9.1% YoY and 5.2% QoQ, on the back of strong performance in Growth Services portfolio.
• Growth Services witnessed QoQ revenue growth of 9.1%, with good traction in IZO™ cloud enablement, media and entertainment, Global Hosted Contact Centre, and mobility services. Growth services portfolio is now EBITDA neutral.
• Data Services now contribute over 75% of overall revenue – an increase of 9% compared to September 2017.
• Consolidated EBITDA increased by 7.4% QoQ and 6.1% YoY, and margins expanded by 150 BPS over the same quarter last year. This was primarily due to focus on boosting operational efficiencies and driving down costs, and reduction of losses in Growth Services.
• Data EBIDTA grew by 10.0% YoY and 4.1% QoQ primarily due to Growth Services turning EBITDA neutral this quarter.
• Rental income from real estate (INR 31 crores) has been reclassified as business income from this quarter and is part of the data business. All previous quarter numbers have been restated to enable like-for-like comparison.
• Consolidated PAT was INR 1.6 crore compared to a loss of INR 58.5 crore in Q1 FY19.
• Free Cash Flow (EBITDA less Capex) for the quarter came in at INR 172 crores – an increase of 67.2% over Q1.
• CAPEX for this quarter was USD 65 Mn compared to USD 72 Mn in Q1 FY19.
• Consolidated net debt for the quarter is at USD 1,251 Mn, a reduction of USD 17 Mn compared to last quarter. Net debt has declined despite dividend payment of USD 22 Mn in Q2.

Commenting on the results, Vinod Kumar, MD and CEO, Tata Communications, said: “Our Growth Services portfolio turning EBITDA neutral this quarter demonstrates that our new services are gaining steady operating leverage. Equally, it is proof that our broadened portfolio is appealing to customers, as they need a dependable digital infrastructure to ensure success in their digital journeys. Our funnel and delivery pipeline for Growth Services is strong, which gives us further confidence for the quarters ahead.”

Commenting on the results, Pratibha K. Advani, CFO, Tata Communications, said: “Our investments in our digital capabilities have started to show results, and we witnessed a double-digit growth of 10.7% sequentially in our Growth Services portfolio on a constant currency basis. This is in line with our strategic intent and long-term vision. Our growth driver in the future will be Innovation Services, we continue to invest in that portfolio while maintaining a balance of profitability and healthy free cash flow generation.”

Business highlights | Q2 FY2019

• Tata Communications acquires mobility and Internet of Things specialist Teleena: Tata Communications has acquired Teleena, a Netherlands-based Internet of Things (IoT) connectivity specialist and mobile virtual network enabler (MVNE). Teleena’s technology reduces the operational complexity and cost of mobility and IoT deployments for businesses. The acquisition is an investment in technology and talent to complement Tata Communications’ growth strategy in the global mobility and IoT market.

• Tata Communications launches state-of-the-art Cyber Security Response Centre in Chennai, India: Tata Communications unveiled a new, state-of-the-art Cyber Security Response Centre (CSRC) in Chennai. The Chennai CSRC follows the recent unveiling of Tata Communications’ Cyber Security Response Centre in Dubai, and the existing centres in Pune and Singapore. The move is part of Tata Communications’ long-term commitment to offering global security services with deeper local expertise.

• Tata Communications launches a specialised cyber security lab at Shanmugha Arts, Science, Technology & Research Academy (SASTRA) in India: Tata Communications, has partnered with SASTRA Deemed University in Tamil Nadu to fund and establish a cyber security lab at the university. With this partnership, the company aims to co-create an ecosystem by partnering with universities globally to address cyber-security challenges today, while building the skills and capabilities for tomorrow.

• Tata Communications strengthens cyber defence in the Middle East with the launch of its cyber security response centre in Dubai: Tata Communications has unveiled an advanced cyber security response centre in Dubai. The cyber security response centre will provide 24/7 cyber security services 365 days a year, to help customers stay one step ahead of evolving cyber threats in the Middle East region. The Dubai launch marks Tata Communications’ fourth dedicated security centre, after Chennai, Pune and Singapore.

• AI will diversify human thinking, not replace it, according to new Tata Communications study: Tata Communications has released a new study based on input from 120 global business leaders that envisions a positive impact of AI in the future workplace. The study identifies how AI can diversify human thinking rather than replace it.

An Investor fact sheet providing a detailed analysis of the results for the quarter ended September 30^th 2018 has been uploaded on the Tata Communications website and can be accessed here.

[1] Traditional services include Virtual Private Network, International Private Line, Internet Leased Line, Ethernet, Internet Protocol –Transit, Inmarsat, Content Delivery Network, National Private Line, Mobility, Data Centre, Unified Collaboration, and Conferencing

2 Growth services include IZO™, Managed Hosting, Managed Security Services, Broadcast, Video Connect, SIP Trunking, Global Hosted Contact Center, Video Streaming, Mobile New Services, Healthcare, Media Management and Mobile Innovation.