Voice business declines substantially and YoY growth declines too on the back of flattish order book | Tata Communications Q4 FY22 Earnings Call Highlights

Tata Communications Q4 FY22 Earnings Call Highlights

• Revenue for the year declined by 2.2% YoY, coming in at INR 16,725 Crores. Voice business declined by 18.1% YoY; Data business grew by 1.4% YoY witnessing healthy growth broadly across Core Connectivity, Digital Platforms & Services and Incubation portfolio.
• Q4 revenue at INR 4,263 Crores, growing by 1.9% QoQ and by 4.7% on YoY basis. QoQ growth is due to pick up in business and improvement across all Data segments.
• EBITDA for the year at INR 4,227 Crores. EBITDA Margin stood at 25.3% which expanded by 40 BPs YoY led by focus on right operating structure and cost efficiency initiatives. Q4 EBITDA at INR 1,045 Crores, growing at 3% YoY. On a QoQ basis, there has been a decline in EBITDA due to higher expenses which are back ended in nature.
•  Profit for the year stood at INR 1,482 Crores as compared to INR 1,251 Crores in FY21, expanding by 18.5% YoY. This has been the highest reported PAT in last 12 years. This translates into an EPS of INR 52 per share.
• CAPEX for FY22 stood at INR 1,608 Crores as compared to INR 1,421 Crores in FY21. CAPEX for Q4 FY22 at INR 434 Crores as compared to INR 392 Crores in Q4 FY21.
• Net Debt at the end of the year at INR 6,774 Crores, a decrease of INR 1,042 Crores as compared to last year. Net Debt to EBITDA is at 1.6x as compared to 1.8x last year. This is on the back of strong cash flows and a healthy profitability in FY22.
• Average cost of borrowing for the year at 2.92%.
• Data business revenue for the year came in at INR 12,779 Crores witnessing a growth of 1.4% YoY and 2.1% QoQ growth. Data business continues to recover across all segments. Data Business EBITDA at INR 3,989 Crores witnessing a growth of 0.4% YoY and a decline of 7.1% QoQ. EBITDA margins came in at 31.2% - a decrease of 30 BPs over the last year.
• Core Connectivity – Full year revenue at INR 9,038 Crores, witnessing a steady growth of 1.4% YoY and 0.5% on QoQ basis.
• Digital Platforms & Services – Full year revenue at INR 3,526 Crore, declining by 0.9% YoY and improving by 3.4% on a QoQ basis. Except Collaboration, all sub-segments within Digital grew in double digits. The underlying trends are positive for this business.
• Incubation Services – Full year revenue at INR 215 Crores, witnessing a growth of 67.6% YoY and 49.1% QoQ
• Transformation Services – This business continues to remain impacted due to slower than expected growth in international business. Revenue was at INR 1,312 Crores witnessing a decline of 1.2% YoY and improving by 6.7% QoQ.
• Payment Solutions – Business continues to remain impacted due to COIVD. Average daily transactions for FY22 were 57 as compared to 68 in FY21. We have deployed more than 1000 franchise ATMs across the country as part of our re-invented business strategy. Revenue for the year came in at INR 165 Crs with an EBITDA of INR 15 Crs
• 50% of the capex is related to customer success. So, as the growth increases, so does the capex.
• EBITDA range- 23-25% guidance for the medium term.
• Next gen connectivity has seen good growth. It has cannibalised some growth from the VPN segment.
• Order book is flattish- On ground attrition increased due to which slowdown in deal conversion.
• Net debt to EDITDA at 1.6x as compared to 1.8x a year ago.
• Collaboration being usage based has suffered in terms of revenues.

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