Tata Communications Q2 loss widens to $50M

Summary:Despite a 27 percent rise in revenue, the Indian communications giant saw the bottomline dragged down further by regulatory changes, unfavorable settlements in its global voice services, and higher sales expenses and investments.

India's Tata Communications saw its net loss widen by 65 percent in the second quarter due to regulatory changes, unfavorable settlements in its global voice services, and higher sales expenses and investments.

In its results announced Wednesday [PDF], the communications giant's revenue rose 27 percent to 42.7 billion rupees (US$744 million), compared with 33.7 billion rupees (US$621 million) a year ago. 

However, the company's net loss widened to 2.73 billion rupees (US$50 million) from 1.65 billion rupees (US$30 million).

Profits had been affected due to regulatory changes leading to higher license fee rates, such as India's department of telecommunications' Wireless Planning and Coordination (WPC) wing's WiMax charges, along with a one-time actuarial loss on Canada's pension fund.

Expenses were also higher due to unfavorable settlements in its global voice services, and increased sales spending and investments for future growth.

Global voice services (GVS) continued to grow, it carried a total of 15.3 billion voice minutes during the quarter, compared to 13.1 billion minutes the same quarter last year. Global data services (GDS) also posted a revenue growth of 25 percent to 16.7 billion rupees (US$308 million) a year ago. 

Revenue from start-up businesses, comprising mainly Neotel, rose 5 percent to 4.9 million rupees (US$89.9 million) from 66.3 million rupees (US$1.22 million) last year.

"The size and scale of our core business has been growing consistently, benefitting from a combination of our investments in global infrastructureand our innovative approach to clients' needs across business lines and geographies," Vinod Kumar, managing director and group CEO of Tata Communications noted in a statement.

He added that the company's efforts to drive sales at Neotel are bearing "visible results" while initiatives at streamlining operations have fundamentally strengthened the business and ability to deliver strong results.

Topics: Tech Industry, India, Networking

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