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Decline in voice business cuts Tata Communications revenue by 6.6% in Q4FY18

Tata Communications has reported a decline in consolidated revenue by 6.6% year-on-year to Rs 4008.6 crore in Q4FY18, citing a decline in voice business as the reason. Revenue in Q4FY17 was Rs 4293.8 crore. Overall, for the financial year 2018, revenue declined by 5.5% as compared to FY17. Through the year, fall in revenue was due to degrowth in total voice minutes and price compression, a decline in payment solutions business, and the impact of currency translation, the company said.

In the quarter, EBITDA was Rs 555.5 crore, which marked a declined of 9.4% QoQ, the reason being upfront investment on new customer wins. However, as compared to same quarter last year (YoY), EBITDA was higher by 12%, due to growth in transformation business, payment solution business breaking even and due to the company’s cost optimization initiative.

Capital expenditure (Capex) for the quarter was Rs 332.7 crore, down 21.6% YoY.

Segments

Gross revenue for the quarter from data business was Rs 2895.4 crore, up by 4% YoY and 0.4% QoQ. EBITDA for data this quarter was Rs 484.1 crore, down by 10.2% QoQ.

For voice, gross revenue for the quarter was Rs 1113.2 crore, which marked a decline of 26.3% YoY and 9.5% QoQ.

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In March 2017, voice accounted for 35.2% of the company’s revenue and data for 64.8%. A year later in March 2018, the shares have changed, in line with the global shift to data, as voice now accounts for 27.8% of the revenue while data accounts for a massive 72.2%. The increased revenue from data also commands change in the company’s expenditure. Capex on voice has been substantially low for past many quarters now, and Q4FY18 was no exception, with only US $ 0.4 million capex. In contrast, total capex on data was $39.3 million.

Notably, only 33% of Tata Communication’s revenues were in Indian Rupee while the rest 67% came in other currencies.

Usage metrics

Data traffic carried by Tata Communications for Q4FY18 was 9.73 terabytes per month, a climb from 8.33terabytes per month. Virtual Private Network (VPN) and International Private Line (IPL) were the key contributors in data revenue with 26.2% and 20.3% of the data revenue mix.

Total active data customers for the quarter were 5,518 as against 4,924 in Q4FY17.

Total volume of voice calls was 8.9 billion minutes in Q4FY18 as compared to 10 billion minutes in Q4FY17. Notably, a large chunk of voice minutes were international long distance calls, 7.7 billion minutes for Q4FY18.

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