“Even though the company is not a party to the above judgment and its case is different and distinguishable from the above judgment, as a matter of prudence the company has assessed and recorded a provision of ₹185.52 crore towards interest which has been disclosed as an exceptional item and a provision of ₹21.09 crore towards tax (net) due to change in effective tax rate on account of adoption of new tax regime,” the enterprise connectivity provider said Thursday. The telecom player also accounted for deferred tax on refunds it received from pending tax litigations with the government, said MD and CEO A.S. Lakshminarayanan in an interaction with Mint following the results.

“We have a long litigious past in terms of tax disputes and others. So we’ve been cleaning up some of that and that’s coming into the profit line as and when we clean up. The effective interest rates have gone up so that is another reason,” the top executive said.

The Supreme Court’s decision in October last year impacted India’s older telecom players—Bharti Airtel, Vodafone Idea and Tata Communications—as it set aside a December 2013 judgment of annual licence fee on adjusted revenue being a revenue expenditure.

The telcos have since provisioned for a larger tax outgo in their second quarter results. Sector watchers had opined that telcos would seek legal remedies, but they’re yet to seek redressal.

Lakshminarayanan said that synergies from The Switch and Kaleyra acquisitions in the US along with complementary solutions from Tata Communications own stable helped in revenues rising more than 24% on-year to ₹5,633 crore. Kaleyra has turned Ebitda positive in the first quarter post acquisition.

Revenues from data services remained the highest contributor earning ₹4,618 crore in the quarter, up 28.5% from the year before.

Lakshminarayanan said that the company had evaluated all its strategies and had decided to focus on the businesses that it was operating in presently, but was making changes to the management and products where it lagged behind competition or was seeing no additional growth.

However, he pointed to segments such as private 5G and IoT which were yet to show significant signs of growth despite analysts having predicted rapid upside in these segments in previous years.

“That’s a function of maybe the markets not putting more into IoT. Similarly in private 5G, while we had invested, we’re doing a lot of proof of concepts, but wouldn’t translate into big scale projects. Those are some portfolios where we will be looking at how much to invest going forward,” he added.

The chief executive added that India market would continue to remain the largest contributor to Tata Communications’ revenue even as international markets show higher pace of growth owing to their comparatively smaller bases. He also noted some revenue upside expected from localization of data and setting up of local data centres following the implementation of the data protection law last year, but declined to quantify it.

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Published: 18 Jan 2024, 10:19 PM IST