Tata Communications posts 18% Q2 revenue growth on steady digital services demand

Tata Communications reported an 18 per cent growth in its second-quarter revenue on Thursday, helped by steady demand for its digital services.

The firm posted revenue of Rs 57.67 billion ($686 million) for the three months ended September 30, as compared to Rs 48.73 billion a year earlier.

Tata Communications provides services such as data connections and cybersecurity to enterprises.

The firm's revenue has been a key metric for investors and analysts in recent quarters as it prioritised revenue growth over margins to strengthen its position in the booming Cloud, networking services, and media and entertainment sectors, partly through acquisitions.

Revenue from Tata Communications' mainstay data services business, which contributes about 84 per cent to the total, rose 21 per cent, driven by a 52 per cent jump in its digital portfolio.

However, a 20 per cent rise in its total expenses, driven mainly by growing network and transmission-related spending, pushed its profit before exceptional items down nearly 7 per cent to 2.78 billion rupees during the quarter, its eighth such decline since late 2022.

"We are executing multiple strategic measures, including land monetisation, which will help us create capacity for future opportunities and reposition our assets to capture medium to long term profitable growth," CFO Kabir Ahmed Shakir said.

The company's shares closed 4.8 per cent lower post its results amid a broader sell-off in the market, which saw the benchmark drop nearly 1 per cent on the day.