Tata Communications reported a 3.5 percent decline in consolidated net profit to Rs 41.7 crore for the first quarter ended June 30, mainly due to one-time exceptional loss from impairment of Neotel goodwill. The company had posted a net profit of Rs 43.3 crore in the same period a year ago. Tata Communications incurred a loss of Rs 92 crore representing the impairment of Neotel goodwill, a majorly owned unit of the company. Tata Communications entered in an agreement with Liquid Telecom in June to sell its South African subsidiary Neotel for about Rs 2,904 crore. Also Read - Budget 2018: Here is what the tech sector and startups are expecting from Government of IndiaAlso Read - Tech spending in India to grow by 12% in 2018
“Operationally we have performed well during the quarter. In same quarter a year ago, we had one-time exceptional benefit and in this quarter we have impact of Neotel goodwill impairment,” Tata Communications Chief Financial Officer Pratibha K Advani said. The consolidated EBITDA (indicator of cash flow) of Tata Communications grew by 18 percent year-on-year to Rs 863 crore for the quarter on the back of strong performance by data services and aided by voice, the company said. The company also divested partial stake in data centre business.
“Both the divestiture of Neotel and the strategic joint venture partnership announcement of our India and Singapore Data Centres give us headroom to operate more effectively in a highly-competitive environment. We are committed to driving efficiency of capital utilisation and this is reflected in the improvement in our Return on Capital Employed for our Core business from 8.6 per cent in financial year (FY) 2016 to 10.1 percent at the end of first quarter FY 2017,” Advani said.
The consolidated revenue of Tata Communications also declined by 2.9 percent to Rs 5,031.69 crore from Rs 5,179.61 crore a year ago. The voice revenue of Tata Communications during the quarter declined by 12.9 percent to Rs 1,789 crore from Rs 2,054.8 crore in the corresponding period of last fiscal. However, the revenue from data services grew by 14.4 per cent to Rs 2,841.6 crore in the reported quarter from Rs 2,483.6 crore in the same period a year ago.
Tata Communications MD and CEO Vinod Kumar said the company is in consistent directional improvement in Global Data services. “We have also seen a healthy accretion in both Global Enterprise and NextGen customers. This is important as these are the cornerstones for our future growth. As we evolve with macro-trends like IoT, Big Data and Artificial Intelligence, the business is geared to deliver a steady enhancement in performance going forward,” Kumar said.