Tata Comms net profit up by 28% on the back of data business

Tata Communications recorded a 27.8% increase in net profit to hit INR3952.1 million ($53 million) for the quarter ending December 2021. It had reported a net profit of INR3094.1 million ($41.5 million) in the same period the previous year.

However, the company reported a marginal drop in its total income from INR42310 million ($567.8 million) in December 2020 to INR42036 million ($564.1 million) in December 2021.

The data segment contributed 77.3% to Tata Communications' revenue in the December 2021 quarter, while voice services contributed just 13.2%. All three components of data business, core connectivity, digital platforms, and incubation services, recorded growth for the company.

It is not surprising then that most of the company's capital expenditure was in its data business. Out of a total capex of INR4000 million ($53.7 million), Tata Communications used INR3450 million ($46.31 million) in its data business.

Data demand

The company has recorded a decline in voice services over the past few quarters. However, this is compensated for by growth in the data sector, and is in line with industry trends.

"We witnessed another quarter of good sequential growth in our data business, with digital platforms and solutions delivering robust results. We continue to focus on providing holistic solutions to our customers and accelerating their digital transformations," said AS Lakshminarayanan, managing director and chief executive officer, Tata Communications, in a statement issued by the company.

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In its recent investor presentation, the company identified six areas as significantly contributing to future growth – core connectivity, next-generation connectivity, voice, connected services, collaboration, and CPaaS and cloud, hosting, security and SD-WAN.

Tata Comms is trying to go beyond providing basic connectivity and network services to enterprise, to becoming a digital solutions provider offering cloud, hosting, Internet of Things (IoT) and security services, among others.

Recently the company was in the news due to its collaboration with Zain KSA, a prominent communications service provider in Saudi Arabia, working on digital transformation.

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— Gagandeep Kaur, contributing editor, special to Light Reading

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