Shares of telecom services provider Tata Communications Ltd fell more than 2% in Thursday's opening trade on the NSE, reacting to its muted March quarter earnings. Operating margins and revenue growth both missed expectations.

                             


Revenue, at Rs470 crore, was down 3.5% sequentially and below analysts estimates impacted by the decline in voice and data business. The former was down 17% quarter-on-quarter and the latter fell by a percent sequentially. 

Analysts attribute the decline in data revenue to a longer deal conversion and execution cycle due to covid-19 and the moderation of UCC (unsolicited commercial communication) traffic. According to analysts at Motilal Oswal Financial Services Ltd, the decline in Ebitda margins of the data segment, which forms a chunk of the overall Ebitda, can be attributed to a fall in revenue, coupled with higher marketing expenses and one-time catch up costs.


Margins showed a marginal 15 basis points improvement, courtesy of cost optimization measures. One basis point is one-hundredth of a percentage point. Ebitda margin stood at 24.9%.

Further, strong cash generation translated into a net debt reduction of Rs186 crore to Rs7,786 crore. The company also made a payment of Rs380 crore to the department of telecommunication on the difference in the accounting of costs. Also, the company's capital expenditure (CAPEX) for Q4FY21 stood at Rs390 crore compared with Rs340 crore in the December quarter of FY21. For fiscal year, capex fell 11% year-on-year to Rs1,420 crore. Some analysts are of the view that moderation in capex and strong operating cashflow generation would continue to help Tata Communications in deleveraging of the balance sheet.