Any current/future new fundraising through debt or equity?

Tata Communications has a robust balance sheet and headroom on debt capacity to fund growth opportunities. They have an active M&A funnel and consider responsible, strategic transactions that create value. Funding for growth (both organic and inorganic) will be optimized through multiple levers including potential monetisation opportunities. Kabir Ahmed Shakir highlighted ongoing assessments and preparatory work on monetisation and value unlocking but cannot share specifics until Board approvals. The company maintains a healthy leverage ratio (net debt-to-EBITDA at 2.37x) and is targeting impr

Any current/future capex/capital investment/strategic investment?

Tata Communications is steadily increasing capillarity investments in Tier 2, 3, and 4 cities, analyzed scientifically by pin codes to address enterprise demand. This expansion is ongoing and not a one-time large exercise. The $300-350 million Capex guidance includes investments for laying fiber in these Tier 3 and Tier 4 cities. The company continues to invest in its fabric products (network, cloud, security, interaction fabrics) to capture new growth opportunities, including multi-cloud connectivity (IZO Multi Cloud Connect) and AI-enabled orchestration across channels. There is an act

Future growth expectations in sales/revenue/volumes?

Revenue growth is expected to improve notably from Q3 onwards, with some launches anticipated around Q3 (Page 16). Order bookings have improved over the past two quarters, indicating a growing sales funnel and longer conversion cycles (Page 10). Some large deals, such as hyperscaler network build, are slated to contribute primarily from the second half of FY26 (Page 12). Digital portfolio aims to grow strongly, targeting Rs. 17,000 crores revenue by FY27 from around Rs. 9,000 crores currently, reflecting strong growth aspirations (Page 8). Macro conditions pose challenges, but interest rate cu

Future growth expectations in earnings/operating earnings/profits/EPS?

Tata Communications aims to accelerate growth with a focus on digital portfolio expansion, targeting Rs. 28,000 crores revenue by FY27, with 60% from digital services (approx. Rs. 17,000 crores) EBITDA margin ambition is to return to a range of 23%-25% within two years; FY25 target about 20% margin Profitable growth is emphasized, balancing growth with healthy ROCE, debt-to-equity ratios, and cost efficiency Integration of acquisitions like Kaleyra and Switch expected to contribute to margin expansion over time Increased order book, especially in core connectivity (hyperscaler, OTT con

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Tata Communications LtdQ3 FY24Telecom - Services

Tata Communications Ltd Q3 FY24 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹2,042P/E: 43.5Market Cap: ₹47.9K CrSector: Telecom - Services

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

Yes

Order

Yes

Capex

Yes

3 of 5 growth signals are positive.

Full analysis

Revenue guidance

Category 3

→Revenue growth is expected to improve notably from Q3 onwards, with some launches anticipated around Q3 (Page 16).
→Order bookings have improved over the past two quarters, indicating a growing sales funnel and longer conversion cycles (Page 10).
→Some large deals, such as hyperscaler network build, are slated to contribute primarily from the second half of FY26 (Page 12).
→Digital portfolio aims to grow strongly, targeting Rs. 17,000 crores revenue by FY27 from around Rs. 9,000 crores currently, reflecting strong growth aspirations (Page 8).
→Macro conditions pose challenges, but interest rate cuts and growing engagement pipelines offer encouragement for the second half of FY25 and beyond (Pages 6, 10).
→Investments in new fabrics and digital products, including multi-cloud and AI orchestration capabilities, will fuel future growth (Pages 8, 14).
→Seasonality impacts media revenues on a yearly basis due to events like Olympics and ICC T20 (Page 16).
→Integration with Switch is progressing well, expanding revenue opportunities especially on the production side (Page 16).

Margin guidance

Category 3

→Tata Communications aims to accelerate growth with a focus on digital portfolio expansion, targeting Rs. 28,000 crores revenue by FY27, with 60% from digital services (approx. Rs. 17,000 crores)
→EBITDA margin ambition is to return to a range of 23%-25% within two years; FY25 target about 20% margin
→Profitable growth is emphasized, balancing growth with healthy ROCE, debt-to-equity ratios, and cost efficiency
→Integration of acquisitions like Kaleyra and Switch expected to contribute to margin expansion over time
→Increased order book, especially in core connectivity (hyperscaler, OTT contracts) indicates future revenue growth potential
→Cable cuts impact is behind, expected to improve margins from Q3 onwards
→Growth in digital fabrics and enterprise networks projected to drive sustainable earnings growth
→Interest cost peaks uncertain due to external rate fluctuations, but managed via hedging
→Overall outlook: steady revenue and earnings growth with margin improvements over next 1-2 years

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Fundraise plans

Yes

→Tata Communications has a robust balance sheet and headroom on debt capacity to fund growth opportunities.
→They have an active M&A funnel and consider responsible, strategic transactions that create value.
→Funding for growth (both organic and inorganic) will be optimized through multiple levers including potential monetisation opportunities.
→Kabir Ahmed Shakir highlighted ongoing assessments and preparatory work on monetisation and value unlocking but cannot share specifics until Board approvals.
→The company maintains a healthy leverage ratio (net debt-to-EBITDA at 2.37x) and is targeting improvements through asset monetisation, such as land parcel sale approvals.
→Interest costs rose due to short-term borrowings and currency mix; no guarantee that current interest cost is peak but cost management and hedging policies are in place.
→Any new fundraising through debt or equity will be subject to strict corporate governance and regulatory compliance, with public disclosures as mandated.

Order book

Yes

- The international region recorded the highest quarterly order booking in the last 5 years (Q2 FY25). - Order book increased by over 25% YoY across all segments in India and international markets except the service provider segment. - Core connectivity order book is driven majorly by hyperscalers and OTTs. - A notable large hyperscaler deal involves building a long-haul dedicated network across data centers in multiple states with a multi-million-dollar total contract value (TCV), spanning 10 years. Revenue from this deal will start from FY26. - Funnel remains robust but additions were subdued in H1; however, win rates improved due to large deals won in the year so far. - Different portfolios have varied timelines for order booking to revenue conversion. Overall, the order book is strong and growing, with a positive outlook for future revenue growth as large deals begin to convert starting FY26.

Capex plans

Yes

→Tata Communications is steadily increasing capillarity investments in Tier 2, 3, and 4 cities, analyzed scientifically by pin codes to address enterprise demand. This expansion is ongoing and not a one-time large exercise.
→The $300-350 million Capex guidance includes investments for laying fiber in these Tier 3 and Tier 4 cities.
→The company continues to invest in its fabric products (network, cloud, security, interaction fabrics) to capture new growth opportunities, including multi-cloud connectivity (IZO Multi Cloud Connect) and AI-enabled orchestration across channels.
→There is an active M&A funnel focusing on strategic, value-creating acquisitions primarily in Digital Products & Services (DPS) and complementary capacities in core connectivity. M&A decisions will be Board-approved.
→Multiple monetization and value unlocking opportunities are being pursued to fund organic and inorganic growth.
→No specific approvals or details on asset disposals or major investments until Board approval and required disclosures are made.

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