India's Tata Communications posts quarterly profit fall as costs rise

(Reuters) -India's Tata Communications reported a second consecutive fall in its quarterly profit on Wednesday, as higher expenses countered healthy growth in its data services business. Its shares, which had risen as much as 11% before the results, were trading 3.8% higher. The firm, which offers data connections and cybersecurity to enterprises, said its consolidated net profit fell 19.4% year-on-year to 1.83 billion rupees ($20.7 million) for the three months ended September 30. Tata Communications has been shifting away from its legacy network services business, which faces pricing and operational challenges, toward expanding digital infrastructure and services—including cloud connectivity, cybersecurity, IoT, and communication platforms—to build new revenue streams. "Our newly launched products in our strategic bets, including Voice AI and cloud networking, are generating significant interest and adoption among our customers," Tata Communications CEO A.S. Lakshminarayanan said. These should enhance profitability and margin strength in the second half of the fiscal year, CFO Kabir Ahmed Shakir said. The firm aims to grow its data business revenue to 280 billion rupees by fiscal 2028, driven by digital services that management expects will boost future revenue and margins. Revenue from the data services business rose 7.4% during the quarter, pushing up its overall revenue by 6.5% to 61 billion rupees. Revenue from the voice solutions business, which provides international and long-distance voice calling services, fell 4.6%. A 10% jump in its network and transmission costs pushed total expenses 6.8% higher from a year earlier, and lowered the profit margin to 3% from 4.4% a year ago. ($1 = 88.3112 Indian rupees) (Reporting by Aleef Jahan in Bengaluru)

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