India's Tata Communications posts 30% slump in profit as expenses weigh

Kaleyra

19/07/2023 14:03

BENGALURU, July 19 (Reuters) - 
  
    Indian network services provider Tata Communications 
 TATA.NS  reported a 30% slump in first-quarter profit on
Wednesday, hit by higher interest costs and lower foreign
exchange gains. 
    Consolidated net profit for the quarter ended June 30, was
3.82 billion rupees ($46.6 million), compared with 5.44 billion
rupees a year ago.  
        The company also plans to raise up to 18 billion rupees
by way of a private placement of non-convertible debentures.
  
    Total expenses climbed about 16% to 44.58 billion rupees as
network and transmission costs rose.  
    The jump in costs outpaced the near-11% increase in income
from operations to 47.71 billion rupees riding on the expansion
of the mainstay data services segment.  
    The company, which has been on an acquisition spree to
expand its offerings, had said in June that it aims to double
its data business revenue over the next four years. 
        In December, it acquired American video production firm
The Switch Enterprises and in June it bought U.S.-based
communication platform provider Kaleyra  KLR.N  in a near-$100
million deal.
  
    Tata Communications has been focusing on revenue over
margins as it seeks to grab a bigger share of the highly
competitive market for cloud, cybersecurity and networking.
    "We are on track with the execution of our strategy; and the
strengthening of our portfolio will increase the relevance
quotient with our enterprise customers," A.S. Lakshminarayanan,
managing director and chief executive officer, said in a
statement. 
    In April, the company flagged that this fiscal year's
margins could be at the lower end of its previous projection of
23-25%. However, analysts have said that the margins may fall
short of the range after the slew of loss-making acquisitions.
    Margins on earnings before interest, taxes, depreciation and
amortization (EBITDA) fell 352 basis points to 21.5% last
quarter. Sequentially, it fell 117 bps. 
        The company is now in a position to fund investments and
acquisitions, while "retaining focus on a healthy balance
sheet," Chief Financial Officer Kabir Ahmed Shakir said.
        Shares of Tata Communications closed 1.03% up ahead of
results. 



($1 = 82.0500 Indian rupees)

 (Reporting by Hritam Mukherjee in Bengaluru; Editing by Dhanya
Ann Thoppil)
 ((Hritam.Mukherjee@thomsonreuters.com; Twitter:
@MukherjeeHritam;))