Synopsis

Tata Communications is restructuring its organization, incurring a one-time staff cost optimization charge. The company reported a decline in consolidated net profit due to restructuring expenses and a data centre outage. Revenue rose by 10.5% from a year earlier, while EBITDA increased. The company remains focused on accelerating growth across its portfolios. Management believes this is a forward-looking effort to align talent.

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Tata Communications said it is restructuring its organisation with certain roles becoming redundant, and has recognised a one-time staff cost optimisation charge of Rs 44.78 crore during the June quarter.

“As part of its initiative to enhance the long-term efficiency of the business, the Company is undertaking organisational changes to align its current and prospective business requirements in a phased manner,” it said in the financial results published Wednesday.

“These changes involves certain positions in the Company becoming redundant and accordingly, the Company has incurred a one-time charge with respect to staff cost optimization,” it said.

The company did not disclose the number of employees affected by the restructuring. Its overall headcount fell by 1,067 year-on-year to 11,739 at the end of the June quarter.

Tata Communications clarified, “These are not layoffs.”

“The organisational changes referenced are part of a phased, forward-looking effort to align our talent with the evolving needs of the business,” a company spokesperson told ET.

The Tata Group’s telecom connectivity and digital services arm reported a 29.35% decline in consolidated net profit to Rs 134 crore, compared to Rs 189 crore in the corresponding period last year. Profit was weighed down by exceptional loss of Rs 106.36 crore on account of restructuring expenses and data centre outage.

The company has also recorded a Rs 30.10 crore provision during the quarter towards estimated losses arising from a fire incident at its data centre. In June, Tata Communications joint venture with STT GDC India data centre in Greater Kailash, New Delhi, was damaged in a fire incident. Several customers including Google Cloud were reportedly impacted due to the outage.

Separately, the company booked a Rs 50 crore provision towards amounts that management believes may not be recoverable under contractual obligations, it said.

Revenue rose 10.5% from a year earlier to Rs 6,583 crore. Earnings before interest taxes depreciation and amortization (EBITDA) increased by 8.2% to Rs 1,230.2 crore from Rs 1,136.8 crore last fiscal, while EBITDA margin contracted by 30 basis points to 18.7% from 19% last year.

"We have started the year well with strong growth across both our core and digital portfolios. Normalised EBITDA performance remains strong. We stay on track to deliver double-digit EBITDA growth this year," managing director and chief executive Ganesh Lakshminarayanan said.

He added that the company remains focused on accelerating growth in its network fabric business, expanding platform revenues, improving digital profitability and strengthening EBITDA-to-cash conversion.