Tech Mahindra Reports Drop In Net Profit, Revenues

IT services company Tech Mahindra on Tuesday reported a 6% sequential fall and 7.3% year-on-year fall in net profit at Rs 1,132 crore for the fourth quarter. The company’s revenues also fell by 0.5% quarter-on-quarter to Rs 8,892 crore. In dollar terms, net profit stood at $162.3 million, down by 13.7% and a 1.9% increase in revenues at $1,267.5 million.

For FY19, Tech Mahindra announced a net profit of Rs 4,298 crore — an increase of 13.1% over last year. Revenues increased by 12.9% at Rs 34,742 crore. Revenue in dollar terms were at $4.9 billion, an increase of 4.2% and up 5.8% in constant currency terms. Digital services revenue grew at 41% y-o-y. The company had a free cash flow of Rs 3,708 crore.

Tech Mahindra managing director & CEO CP Gurnani said: “While our enterprise business has performed satisfactorily during the year, we are encouraged by the revival of the communications business. Our continued investments into our partner ecosystem for building a unique portfolio of 5G offerings will enable us to address the networks of the future opportunity.”

Chief financial officer Manoj Bhat said: “It has been a year of overall operational performance improvement on various fronts, leading to a significant expansion in Ebitda margin year on year. We initiated our maiden share buyback programme on the back of a healthy cash conversion during the year, with a view to returning enhanced value to our shareholders.”

Bhat said the company’s Ebitda margin stood around 18.4% compared with 19.3% in the previous quarter. FY19 margins increased to 15% against 11.8% last year. The company saw some increase in subcontracting costs.
On attrition, the company highlighted a positive trend, reporting a 2-2.5% drop in Q4 annualised attrition, standing at 19%. Spectrum auction needs to be started for 5G rollout: TechM  The Department of Telecom needs to commence the auction of 5G spectrum in India as the regulators in some countries have already formulated policies and initiated spectrum auctions for the 5G rollout in their respective nations, a senior Tech Mahindra official has said.

Manish Vyas, president of communications business and chief executive officer of network services, Tech Mahindra, said 4G is yet to touch all parts of the country, and while that happens on a massive scale, there are some “definite green-shoots” of 5G trials. More than technology, however, the bigger impediment could be the regulatory body’s policy on 5G spectrum.

The experimental licence by DoT will need modifications, and till that happens, the sector is in for a “waiting game”, he said. “US, Australia, Italy, Switzerland, Saudi Arabia and more (have started 5G spectrum auctions). Spectrum is the life blood of any wireless network. For 5G, globally regulators have been licensing mid-band (3.5GHz) and in some countries mmWave (millimeter Wave) spectrum bands as well.  For 5G to be rolled out in India, the first necessary step is for the regulator to auction the 5G spectrum. Everything else will be gated on spectrum,” he told PTI in an email.―Financial Express