Tata Communications Q2FY22 Conference Call Highlights

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  • Sequential Revenue growth is due to gradual pick up in business and improvement across both Data and Voice segment.
  • YoY Revenue decline is primarily due to decline in Voice business and moderation of collaboration traffic in Data business.
  • EBITDA has some onetime benefits; 1) cost benefit from the timing difference in hiring new employees to fulfil open positions in the organization, and 2) reversal of provision of doubtful debts due to better collection efforts
  • Net Debt at the end of the quarter was INR 7,761 crore, down by INR 240 cr QoQ and 870 cr YoY despite INR 399 cr of dividend payout this quarter. This is on the back of a better working capital mix and improvement in operating profit.
  • Average cost of borrowing for the quarter was at 2.87%
  • Order Book increased to double digits on YoY basis after a long time, which is positive.
  • Order book conversion to revenues will still be affected due to OEM’s and clients facing supply side constraints due to global chip shortages and supply chain disruptions.
  • Recently launched bandwidth on demand service on pay as you consume model.
  • Collaboration services are affected due to decrease in SIP traffic. As and when the offices open to near full strength, SIP (Session initiation protocol) traffic will benefit.
  • The ecosystem of datacenters will further drive the growth for the company because of its advanced connectivity solutions.
  • Guidance for EBITDA Margins in the medium term: 23% to 25%.
  • Capex guidance for FY-22: 250 million USD.

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