Tata Communications – Q3FY22 first cut, ICICI Securities

Tata Communication’s Q3FY22 performance was on expected lines with data segment showing improvement both YoY and QoQ.

Q3FY22 earnings summary

• Topline came in at ₹ 4185 crore, down 0.9% YoY & up 0.3% QoQ, largely in line with expectations. The data revenues (forming ~77% of the revenues) was up 3.4% YoY (up 3% QoQ) at ₹ 3233 crore, due to pick up in business and improvement across all Data segments. Voice segment continued to remain weak with revenues down -17.8% YoY (down 8.6% QoQ) at ₹ 554 crore
• Consolidated EBITDA came in at ₹ 1082 crore, up 3.53.9% YoY and down 2.7%QoQ. The consequent margin was at 25.9% (up 109 bps YoY and down 79 bps QoQ). We highlight that Q2FY22 EBITDA had some onetime benefits ₹ 50 crore. Adjusted for the same, EBITDA was up 1.8% QoQ. Data EBITDA margin was at 32.2%, down 80 bps QoQ (up 40 bps on adjusted basis) and flattish YoY. Voice segment margins was at 7.8%, up 20 bps QoQ
• The company reported a PAT of ₹ 395 crore, up 28% YoY
• There was a sequential decline in net debt by ~₹ 572 crore QoQ on the back of a better working capital mix robust FCF. The Net Debt to annualised EBITDA stood at comfortable levels of 1.7x as compared to 1.9x in Q2

Tata Communication remains a key beneficiary of new normal of hybrid work structure, increased conferencing needs thereof and overall digitisation at enterprise levels. We seek management commentary on the growth trajectory ahead. We will soon come up with an update post the conference call.

CT Bureau