Tata Communications Q2 consolidated profit up 7-fold to Rs 385 crore

Tata Communications on Friday posted an around seven-fold jump in consolidated net profit at Rs 384.81 crore for the September quarter.

The company had registered a profit of Rs 54.31 crore in the corresponding period of the preceding fiscal.

Consolidated revenue grew 4.5 per cent to Rs 4,477.18 crore during the reported quarter from Rs 4,282.3 crore in the year-ago period, it said in a BSE filing.

Besides, the company concluded the sale of a land parcel along with building for a total consideration of Rs 67.41 crore.

The company during the quarter ended September 30, 2019 received a demand note from the Department of Telecommunications (DoT) to pay Rs 6,633.43 crore towards licence fees on its adjusted gross revenue (AGR) for the financial years 2006-07 till 2017-18, it added.

"The demands received by the company included an amount of Rs 543370 lakhs which were disallowed by the DoT towards the cost adjusted to gross revenue by the company that were claimed on 'accrual basis' instead of payments basis, for which revised statements on the basis of actual payment has been submitted to the DoT," Tata Communications said.

The Supreme Court had last year upheld a government formula to calculate revenue share with telecom service providers. It has ordered companies to clear their dues in 10 yearly instalments starting next fiscal and 10 per cent of total dues as demanded by the DoT by March 31, 2020.

Tata Communications said though the company believes that it has a case to defend its point, but still it made a provision of Rs 337.17 crore during the January-March quarter.

For the balance amount, the company believes that the "likelihood of the same materialising is remote since the deduction on payment basis has not been considered by the DoT", the filing said.

The company also has an appeal pending related to its international long distance and national long distance licence involving a dispute of around Rs 1,199.73 crore with the DoT.

"The company believes that it will be able to defend its position and also has obtained a legal opinion in this regard. Accordingly, the company has assessed the balance demand of Rs 119973 lakhs as part of contingent liability," the filing said.

The company made a provision of Rs 11.8 crore and Rs 22.29 crore towards interest on the unpaid provisions for the quarter and half year ended September 30, 2020.

"Data business continues to grow at a healthy pace and profitability has improved due to our focus on operational efficiencies. Our margins have expanded, and we have witnessed 3 successive quarters of double-digit Ebitda growth leading to strong profit after tax. There has been a robust improvement across all financial parameters," its Chief Financial Officer Pratibha K Advani said in a statement.

Shares of Tata Communications closed at Rs 877.6 apiece, up 4.8 per cent.

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