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Tata Communications – Q3FY23 First Cut

Tata Communications’ Q3FY23 performance was a mixed bag where revenues recovery continued but margins saw more than expected dip.

Q3FY23 earnings summary

  • Topline came in at | 4528 crore, up 8.2% YoY & up 2.2% QoQ, driven by the data revenues (forming ~79% of the revenues) which was up ~11.1% YoY (up 2.9% QoQ) at | 3593 crore, tad better than expectations of 10% YoY growth. Incubation services and Digital Platforms segment of Data business witnessed strong growth of 125% and 17% YoY, respectively. Voice segment continued to remain weak with revenues down 8.7% YoY (down 3.6% QoQ) at | 506 crore
  • Consolidated EBITDA came in at | 1077 crore, down 0.5% YoY and down 4.6% QoQ. The consequent margin was at 23.8% (down 207 bps YoY and down 170 bps QoQ). The overall margin miss (vs. our expectations of 24.9%) was owing to lower Data EBITDA margin, which was at 26.4%, down 246 bps QoQ. We await further detail on segmental margins within data (which has not been disclosed)
  • The company reported a PAT of | 394 crore, down 0.3% YoY, aided by lower taxes. PBT was down 9.4% YoY, given the muted operating performance and higher interest expenses
  • There was a sequential decline in net debt by ~| 130 crore QoQ, largely aided by cash flow generation. The Net Debt to annualised EBITDA was stable QoQ at 1.5x.


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