Release Date: July 18, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Data revenue grew by 9.4% year-on-year, indicating strong performance in the data segment.
- Digital revenues increased by 17.4% year-on-year, showcasing robust growth across the digital portfolio.
- EBITDA margin improved to 19.1%, reflecting better profitability and operational efficiency.
- The company secured significant multimillion-dollar deals, including a large captive SOC deal and a greenfield Wi-Fi 6 network deployment.
- Order book experienced a healthy double-digit growth quarter-on-quarter, suggesting strong future revenue potential.
Negative Points
- Core connectivity business saw a sequential decline of 1.4% quarter-on-quarter, impacted by issues in the SAARC region.
- Net debt increased to INR10,124 crores, primarily due to working capital effects and seasonal factors.
- Free cash flow for the quarter was negative INR621 crores, affected by CapEx investments and lack of tax refunds.
- GCS revenue declined by 33% quarter-on-quarter and 29% year-on-year, due to the impact of an onerous contract exit.
- The SAARC region faced economic and payment issues, leading to business disruptions and impacting margins.
Q & A Highlights
Q: Can you explain the challenges faced in the SAARC region and their impact on core connectivity growth?
A: The SAARC region is experiencing economic issues leading to payment delays and non-payments, which have affected our business. Excluding SAARC, our data center connectivity wins are progressing, and we expect revenue from these later in the year. We remain confident in achieving low to mid-single-digit growth in core connectivity by focusing on market opportunities, especially in the BFSI segment. - Amur Lakshminarayanan, CEO
Q: What factors contributed to the decline in NR margins over the past quarters?
A: The decline in NR margins is primarily due to the high-margin SAARC region revenue dropping off, affecting the weighted average mix. Additionally, seasonal renewals and price impacts during renewal cycles contribute to this decline. - Kabir Shakir, CFO
Q: How is the digital business performing, and what are the expectations for its growth?
A: The digital business has shown healthy growth, with all segments performing well. We have a strong order book and expect this trend to continue. The digital portfolio's relevance is increasing, and we are confident in sustaining growth. - Amur Lakshminarayanan, CEO
Q: Can you provide insights into the cloud business and its growth prospects?
A: The cloud business, particularly in India, is seeing increased adoption. We target stable workloads that benefit from our cost-effective, secure, and unified service offerings. We see significant opportunities in private cloud solutions, especially for BFSI and other sectors. - Amur Lakshminarayanan, CEO
Q: What are the key levers for improving margins in the digital portfolio?
A: Margin improvement will come from scale, cost efficiencies, and a favorable product mix. We are implementing AI for product development and focusing on higher-margin services like programmable voice and RCS. These efforts will enhance profitability across the digital portfolio. - Amur Lakshminarayanan, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
