Tata Communications has yet to see any major impact of the macro-economic challenges arising due to the on-going global tariff uncertainties, the digital enterprise solutions provider’s MD & CEO Amur Lakshminarayanan told FE.
“We have not seen any knee jerk reaction (to the tariff issue), though people are cautious,” he said.
While IT and digital solutions providers face no direct impact of the ongoing global trade tensions since services have been so far exempt from the tariffs announced, there is an indirect impact as affected global clients review and pull back on discretionary spending. For Tata Communications, 57.8% of its data revenue in FY25 came from international markets.
Data revenue accounted for 84.43% of the firm’s topline in the FY25. He added that while in Q4, Tata Communications added deals to its funnel, there were fewer large deals.
“However, Lakshminarayanan said it is not necessarily due to any impact of macro-economic uncertainties and more due the nature of business,” he stated. “People are still gauging the impact of the recent events (related to US tariffs). It will take some time for the full impact to be felt, and in the meantime, we see no change in the size of deals or any significant delays,” he added.
The Tata company also continues to evaluate its subsidiaries in order to streamline the business. In FY25, it divested the payments solutions subsidiary called Tata Communications Payments Solutions Limited.
“We have said that we want to dilute our stake in NetFoundry which was burning cash and so are looking for external investors. We are simultaneously working to turn around TCTS (Tata Communications Transformation Services),” Lakshminarayanan said.
For the fiscal fourth quarter, revenues came in at Rs 5, 990 crore, slight ahead of Bloomberg estimates of Rs 5, 967 crore. Its digital services portfolio which includes CPaaS (communication platform as a service), cloud services, and security is now almost 50% of the business.
Within digital services portfolio, all verticals save the media services vertical grew in double digits.
The firm’s earnings before interest, taxation, depreciation and amortisation (EBITDA) for the quarter ended March 31, 2025 came in at Rs 1, 122 crore, trailing Bloomberg estimates of Rs 1, 220 crore. EBITDA margin for the quarter was down 33 basis points, which Lakshminarayanan attributed to a combination of cost synergies from acquisitions yet to kick in.
On a full fiscal basis, slowdown in core connectivity business, especially in Bangladesh also contributed to EBITDA margin contraction of 100 basis points. Core connectivity is a high margins business as compared to digital services, resulting in an impact on overall margins in FY25.
“We maintain the 23%-25% margin aspirations for the medium term,” Lakshminarayanan reiterated. The firm’s revenues grew 11.2% annually at Rs 23, 109 crore for FY25, while EBITDA for the fiscal grew 5.8% annually at Rs 4, 569 crore.