On a consolidated basis, Tata Communications (TCOM) reported 3QFY09 revenues, EBITDA and net income of Rs26.1 bn (up 5% qoq), Rs3.8 bn (up 41% qoq) and Rs650 mn (up 83% qoq. EBITDA margin rose 360 bps qoq to 14.4% due to rising proportion of non-voice revenues. Excluding net income, reported financial are not comparable with our estimates due to the difference in the accounting of Neotel’s financials -TCOM does a proportionate consolidation, we account for the same as income/loss from an Associate at the
post-tax level.
Highlights of Tata Communications Analyst Call:
- TCOM is raising debt to fund its capex outlay; management is in dialogue with lenders to rework covenants. In our view, going forward, rising interest expense would dent bottom-line.
- TCOM will tender part of its 15% stake in Tata Teleservices (TTSL) to NTT DoCoMo as a part of NTT DoCoMo’s planned acquisition of 6% secondary stake in TTSL
- No progress on the sale of surplus land.
- As expected TCOM awaits broadband wireless spectrum auction to expand its WiMAX-based retail broadband services (currently provided in 4 cities, adding 4,000 subs/month).