Tata Communications said profit after tax jumped meanwhile by a staggering 613 percent to INR 3.84 billion, while net debt reduced to 46.31 billion from 90.08 billion. Revenues rose 3 percent year-on-year to INR 44.02 billion ($599 million) in its fiscal second quarter to end June, helped especially by growth at the company’s data business.
All segments posted growth however, with demand driven by remote working, cloud adoption and the greater use of digital applications. EBITDA jumped 38.9 percent to INR 11.58 billion ($155 million), boosted also by operational efficiencies.
The company’s data business reported revenue up 7.2 percent, with data EBITDA climbing 47.2 percent to INR 11.08 billion. Tata’s India enterprise business increased by 5.1 percent and international enterprise business by 16.4 percent.
The company, during the quarter ended September 30th 2019, received a demand note from the Department of Telecommunications (DoT) to pay INR 60 billion towards license fees on its adjusted gross revenue (AGR) for the financial years 2006-07 till 2017-18, it added.
"The demands received by the company included an amount of Rs 543370 lakhs which were disallowed by the DoT towards the cost adjusted to gross revenue by the company that were claimed on 'accrual basis' instead of payments basis, for which revised statements on the basis of actual payment has been submitted to the DoT," Tata Communications said.
The Supreme Court had last year upheld a government formula to calculate revenue share with telecom service providers. It has ordered companies to clear their dues in 10 yearly installments starting next fiscal and 10 percent of total dues as demanded by the DoT by March 31, 2020.
Tata Communications said though the company believes that it has a case to defend its point, but still, it made a provision of INR 3.37 billion during the January-March quarter. For the balance amount, the company believes that the "likelihood of the same materializing is remote since the deduction on payment basis has not been considered by the DoT", the filing said.
"Data business continues to grow at a healthy pace and profitability has improved due to our focus on operational efficiencies. Our margins have expanded, and we have witnessed 3 successive quarters of double-digit Ebitda growth leading to strong profit after tax. There has been a robust improvement across all financial parameters," its Chief Financial Officer Pratibha K Advani said in a statement.
A.S Lakshminarayanan, MD and CEO, Tata Communications, said, “We have had a strong performance in Q2, as we continue to deepen our customer engagements and support enterprises to seamlessly embark and advance on their digital transformation journeys. Leveraging the shift to cloud-first, internet-first strategies, we are innovating across our portfolio to offer solutions that are tailored to this new digital-first world. We see great opportunities ahead, as organizations look to harness the power of technology to transform their business models and drive competitive differentiation and sustainable development.”
