Tata Communications has turned in a net profit of Rs 17.7 crore for the second quarter of the current fiscal, against a loss of Rs. 57.7 crore in the same year-ago quarter. The turnaround was due to strong improvements in revenues and profit margins in its global voice and global data business.
On a consolidated level, the company narrowed its losses, while also clocking a 60 per cent growth in EBITDA. Its South African subsidiary, the telecom operator Neotel reported an operating profit for the first time this quarter.
Segmentally, revenue growth was 4.1 per cent in the voice business, 12.3 per cent in data, and 30 per cent for Neotel. EBITDA margins in the voice and data categories improved two and four percentage points respectively.
“Our focus is on margins; we are becoming more profitable with every quarter recently and we want to consolidate that trend,” said Mr Sanjay Baweja, CFO.
“It is not so much cutting costs as cutting the cost structure,” added Mr Srinivas Addepalli, Senior VP, Corporate Strategy and Communications. “We are catering to new business through the same costs, through more productivity and efficiency. The story is about growth, not cost-cutting.”
For instance,, the intensity of capital expenditure (expenditure as a proportion of revenues) is now down from 35 per cent to the range of 12-15 per cent, and that trend with the emphasis on profitability will continue, he said.
Over the last four to five years, the company had spent $2 billion, mostly on its submarine cable network. This year, the capital expenditure will amount to $450 million, said Mr Baweja.
Its emphasis is mostly in the large enterprise sector. It has been working on offering cloud computing services and mobile broadband support services (not getting into services itself but helping mobile operators with infrastructure), said Mr Addepalli.
On the BSE, its stock rose marginally on Wednesday, to close at Rs. 187.10, up 0.05 per cent.