Tata Communications Ltd

- Cash capex for the quarter stood at INR 630 crore, with a ramp-up attributed to payments for capex projects committed in the prior year. - There is a catch-up happening as approved capex was higher last year but actual cash capex was lower due to delayed deliveries and better payment terms. - The company is investing in building long-term capabilities to strengthen their CommTech positioning. - Investments include enhancing AI capabilities, cloud computing power, and digital infrastructure like IZO™ cloud. - Strategic investments are made in integration of acquisitions like Kaleyra, focusing on product, infrastructure, and platform integration. - The company is selective and evaluates ROI before expanding business into new geographies or scaling investments. - Overall, there is a balance between making investments and maintaining profitability, with a strategic focus on growth areas like digital services, media, and IoT segments.

- Overall macro environment in the U.S. is improving, with green shoots visible in client conversations indicating potential for higher tech spends in CY24. - Despite tepid overall macro conditions, a healthy funnel is developing with increased participation levels and customer relevance. - International growth is robust in certain markets, with some regions delivering double-digit growth (around 20%). - Order booking showed improvement in H1 compared to muted growth in H2 of last year; decision-making remains slow but funnel participation is increasing. - Digital portfolio underlying revenue growth YTD is at 18.3%, with strong momentum in Next Gen services and Collaboration portfolios. - Kaleyra business is progressing towards EBITDA breakeven with medium-term targets of double-digit margins. - Sales and marketing efforts will be doubled down to capitalize on expanding opportunities, especially internationally where footprint is currently small. - Company remains optimistic about growth trajectory once macro conditions improve.

- Tata Communications expects to continue profitable growth driven by both organic and inorganic investments. - Kaleyra has turned EBITDA positive ahead of expectations, with a target to achieve double-digit margins within 18-24 months. - Switch is progressing towards EBITDA breakeven, with narrowed losses and plans to accelerate cost and revenue synergies. - Underlying digital revenues showed healthy growth (6.6% Y-o-Y), with YTD digital portfolio up 18.3%. - The company aims to sustain EBITDA margins in the 23-25% range medium-term. - Growth in international markets is strong in certain regions, with double-digit growth in some geographies. - Macro conditions remain tepid, with slower order-book conversions and longer decision-making cycles but increasing funnel and customer participation. - The management expects to double down on marketing and sales efforts and increase footprint to capitalize as the environment improves. - Overall future earnings growth is seen as sustainable but contingent on macro improvements and execution of strategic initiatives.

- Order booking in H1 FY24 was good but slowed down in H2 FY23, leading to a slowing revenue growth. - The funnel for new opportunities looks healthy with increasing participation levels and expanding footprint, especially internationally. - Conversion of opportunities is taking longer than normal due to slower customer decision-making amid tepid macro conditions. - Some opportunities are shelved when customers delay decisions too long, causing the funnel to be refreshed regularly. - Certain international markets are performing well, delivering double-digit growth, while others are yet to show momentum. - The company is well-positioned to capitalize more as macro conditions improve. - Overall, the order book shows improvement, yet growth uncertainty remains due to the macro environment and delayed decisions.

- The company assumed the net debt of Kaleyra as part of the acquisition, which impacted the interest cost. - Kaleyra bond holders exercised a change of control clause leading to USD 200 Mn bond repayment, currently covered by short-term facilities. - The company plans to refinance this with medium to long-term instruments potentially at lower cost. - Interest costs reflect increased Fed rates and partial exposure to variable rates due to hedging policy. - The company’s ambition is to operate under 2X net debt to EBITDA and reduce debt faster than EBITDA and ROCE improvement. - There is no explicit mention of immediate new fundraising through debt or equity. - Future refinancing and financing requirements are dynamic and will be addressed based on cash flows and investment plans.