Tata Communications incurs loss of Rs250 crore in September quarter
New Delhi: Tata Communications on registered consolidated loss of Rs250 crore in the September quarter of 2017-18, chiefly because of its investment in sister concern Tata Teleservices. The company had posted profit of Rs39.96 crore in the same period a year ago.
Consolidated revenue declined 7.31% to Rs4,218 crore in the reported quarter, from Rs4,509 crore in the previous fiscal. Data business posted a revenue growth of 2.2%, ‘growth services’ 40.5% and traditional services 1.7% year-on-year.
“PAT (profit after tax) recorded negative at Rs250 crore on account of additional provision of Rs186 crore as per the contractual obligation to Tata Sons on the Tata Teleservices investment and due to other one-time exceptional provisions of Rs27 crore,” Tata Communications said in a statement.
The company, in the results note, said it has invested in Tata Teleservices (TTSL), which is recognised at fair value through other comprehensive income.
“Based on the recent developments in TTSL, the company has recognised a loss of Rs51,553 lakh in other comprehensive income for the quarter ended 30 September 2017,” the note said.
Tata Sons has agreed to sell TTSL, which was reeling under debt of about Rs40,000 crore, to Bharti Airtel. The companies said the deal is on a no-debt, no-cash basis, implying Airtel is not taking over any of the about Rs40,000 crore debt with Tata Teleservices and is neither paying any cash.
Even 70-80% of the Rs9,000-10,000 crore deferred payments for spectrum that TTSL holds will be paid by the Tatas.
On the performance of the company, Tata Communications MD and CEO Vinod Kumar said: “Our portfolio continues to transform in line with our strategic intent to grow our digital infrastructure services. In addition to the accelerating performance of growth services, we are buoyed by the market response to our new cyber-security and IoT services. We continue to invest in our internal digitalisation programme to enhance future productivity and customer experience.”
Stock of Tata Communications closed at Rs712.05, down 2.41% from its previous close, on the BSE today.