Tata Communications Ltd

- 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.

- 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.

- 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).

- 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

- 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.