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Tata Communications Limited Interim / Quarterly Report 2021

Aug 4, 2021

60418_rns_2021-08-04_ef737def-21a5-4bb0-9eca-65a5a3c46d3e.pdf

Interim / Quarterly Report

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HQ/CS/CL.24B/17181 August 4, 2021

National Stock Exchange of India Limited Exchange Plaza, Bandra Kurla Complex, Mumbai - 400 051 SYMBOL: TATACOMM

BSE Limited P.J. Towers, Dalal Street, Mumbai - 400 001 Scrip Code: 500483

Dear Sir / Madam.

Sub: Unaudited Financial Results of Tata Communications Limited ("the Company") for the quarter ended June 30, 2021.

Pursuant to Regulation 33 read with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we enclose the unaudited standalone and consolidated financial results of the Company for the quarter ended June 30, 2021, which have been approved and taken on record at the meeting of the Board of Directors of the Company held today (Attachment A).

We would like to state that S.R. Batliboi & Associates, LLP, Statutory Auditors of the Company, have issued a Limited Review Report with an unmodified opinion on the above-mentioned financial results (Attachment B).

A press release in this regard is also enclosed at (Attachment C).

The aforesaid documents are also available on the website of the Company at www.tatacommunications.com/investors/results.

The meeting of the Board of Directors commenced at 13:00 hours IST and concluded at 17:00 hours IST.

Thanking you,

Yours faithfully, For Tata Communications Limited

Zubin Adil Patel Company Secretary and Compliance Officer

TATA COMMUNICATIONS Tata Communications Limited Regd. Office: VSB Mahatma Gandhi Road Fort Mumbai - 400 001 Tel: 91 22 6659 1968 email: [email protected] CIN: L64200MH1986PLC039266 website: www.tatacommunications.com

TATA COMMUNICATIONS LIMITED

REGD. OFFICE: VSB, M.G. ROAD, FORT, MUMBAI-400001.

$(\overline{\mathfrak{k}}$ in crores) A. STATEMENT OF STANDALONE FINANCIAL RESULTS FOR THE QUARTER ENDED $0.021$

JUNE 30, 2021 For the quarter ended
Particulars June 30 2021 March 31 2021 June 30 2020 ended
March 31
2021
(Refer notes below) (Unaudited) (refer note 2) (Unaudited) (Audited)
$\mathbf{1}$ Income from operations 1,576.20 1,578.34 1,510.35 6,225.32
$\overline{2}$ Other income, net 169.00 42.53 35.50 274.56
3 Total Income (1+2) 1,745.20 1,620.87 1,545.85 6,499.88
$\overline{4}$ Expenses
a. Network and transmission expense 518.37 522.98 499.15 2,051.01
b. Employee benefits expense 328.44 277.73 264.51 1,104.61
c. Finance costs 23.54 23.27 30.90 106.73
d. Depreciation and amortisation expense 219.56 269.05 238.17 972.89
e. Other expenses 254.73 280.88 267.51 1,086.16
f. Total expenses (4a to 4e) 1,344.64 1,373.91 1,300.24 5,321.40
5 Profit from ordinary activities before exceptional
items and tax $(3 - 4)$		 400.56 246.96 245.61 1,178.48
6 Exceptional items (Refer note 3) 19.44 (10.49) 50.82
7 Profit / (Loss) from ordinary activities before tax
$(5 + 6)$		 400.56 266.40 235.12 1,229.30
8 Tax expense/ (benefit):
a. Current tax 73.91 32.51 81.68 286.92
b. Deferred tax (7.10) 24.55 (20.23) (20.28)
9 Profit / (Loss) for the period $(7 - 8)$ 333.75 209.34 173.67 962.66
10 Other Comprehensive Income / (Loss) (net of tax) (24.49) 3.99 (12.39) (2.73)
11 Total Comprehensive Income / (Loss) $(9 + 10)$ 309.26 213.33 161.28 959.93
12 Paid up equity share capital (Face value of ₹10 per
share)		 285.00 285.00 285.00 285.00
13 Reserves excluding Revaluation reserve 8,575.47
14 Debt Equity ratio 0.06
15 Debt service coverage ratio (no. of times) 12.77
16 Interest service coverage ratio (no. of times) 18.58
17 Asset coverage ratio (no. of times) 8.22
18 Net worth 9,066.53
19 Earnings per share (of ₹ 10/- each) (not annualised)
Basic and diluted earnings per share $(\bar{\mathbf{x}})$ 11.71 7.34 6.09 33.78

Debt Equity ratio = Total Debt (Long term borrowings + Short term borrowings + Current maturities of long term borrowings) / Equity

Debt service coverage ratio = Earning before exceptional items, interest, depreciation and amortization and tax (EBITDA)/ (Finance costs + Short term borrowings + Current maturities of long term borrowings)

Interest service coverage ratio = EBITDA/ Finance costs

Asset coverage ratio = (Property, plant and equipment + Capital work in progress + Investment property + Other intangible assets + Intangible assets under development + Investment property under development)/ Total Debt

B. Standalone Business Segment Information:

i. Segment wise revenue and results:

$(\bar{\bar{\mathbf{\xi}}}$ in crores)
For the quarter ended For the year
ended
Particulars March 31 2021
June 30 2021		 June 30 2020 March 31 2021
(Unaudited) (refer note 2) (Unaudited) (Audited)
Income from Operations
Voice Solutions 26.60 24.68 50.51 166.02
Data and Managed Services 1,508.35 1,509.66 1,417.10 5,890.43
Real Estate 41.25 44.00 42.74 168.87
Total 1,576.20 1,578.34 1,510.35 6,225.32
Segment result
Voice Solutions (54.23) (30.60) (96.61) (267.38)
Data and Managed Services 282.35 227.64 309.60 1,168.27
Real Estate 26.98 30.66 28.02 109.76
Total 255.10 227.70 241.01 1,010.65
Less:
(i) Finance Costs 23.54 23.27 30.90 106.73
(ii) Other un-allocable (income)
net of un-allocable expenses		 (169.00) (61.97) (25.01) (325.38)
Profit/(Loss) before taxes 400.56 266.40 235.12 1,229.30

ii. Segment Assets and Liabilities:

( ₹ in crores)
Particulars As on
June 30 2021 March 31 2021 June 30 2020
Segment Assets
Voice Solutions 97.30 100.93 89.72
Data and Managed Services 6,488.47 6,083.08 6,830.22
Real Estate 427.51 421.03 499.64
Unallocable Assets 7,471.17 7,592.65 6,765.30
Total Assets 14,484.45 14,197.69 14,184.88
Segment Liabilities
Voice Solutions 146.39 147.18 225.60
Data and Managed Services 3,431.79 3,394.69 3,368.35
Real Estate 88.41 85.65 114.28
Unallocable Liabilities 1,841.07 1,503.64 2,094.77
Total Liabilities 5,507.66 5,131.16 5,803.00

iii. Notes to Segments:

The Company's operating segments comprises of Voice Solutions, Data and Managed Services and Real Estate. The composition of the operating segments is as follows:

Voice Solutions include International and National Long Distance Voice services.

Data and Managed Services include corporate data transmission services, virtual private network, signaling and roaming services, television and other network and managed services.

Real Estate includes lease rentals for premises given on lease.

Notes to standalone financial results:

    1. The above standalone unaudited financial results of the Company for the quarter ended June 30, 2021 have been subjected to a limited review by the statutory auditors. These results have been reviewed by the audit committee and taken on record and approved by the Board of Directors at their meeting held on August 4, 2021.
    1. The figures of the quarters ended March 31, 2021 are the balancing figures between the audited figures in respect of the full financial year and the published figures of nine months ended December 31, 2020, which were subjected to limited review by the statutory auditors.
    1. Details of exceptional items are listed below

$(\bar{z}$ in crores)

For the quarter ended For the year ended
June 30 2021 March 31 2021 June 30 2020 March 31 2021
1. Staff cost optimization (refer note a) - (0.65) - (2.93)
2. Provision towards license fees (refer note b) - (4.16) (10.49) (37.88)
3. Gain on sale of fixed assets (refer note c) 67.38
4. Insurance claim (refer note d) 24.25 $\overline{\phantom{0}}$ 24.25
Total 19.44 (10.49) 50.82
  • a. As part of its initiative to enhance the long-term efficiency of the business, the Company undertook organisational changes to align to the Company's current and prospective business requirements. These changes involved certain positions in the Company becoming redundant.
  • b. During the year ended March 31, 2020 the Company made a provision towards licence fees of $\bar{\tau}$ 341.64 crores which includes ₹ 337.17 crores towards the period covered in the DOT demand (Refer note 4). Further for the quarter and year ended March 31, 2021, the Company made a provision of $\bar{\tau}$ 4.16 crores and $\bar{\tau}$ 37.88 crores towards interest on the unpaid provisions and made a payment of $\bar{\xi}$ 379.51 crores under protest to DOT.
  • c. During the year ended March 31, 2021, the Company concluded the sale off a parcel of its land along with building on such land, for a total consideration of ₹ 67.41 crores (net of transaction cost) resulting into a gain of ₹ 67.38 crores. These assets were disclosed under assets held for sale.
  • d. During the quarter and year ended March 31, 2021, the Company has recognized an insurance claim of $\bar{\xi}$ 24.25 crores against loss caused due to malfunctioning of the fire suppression system in earlier years.

  1. During the quarter ended September 30, 2019, the Company had received demands from Department of Telecommunications (DOT) aggregating to ₹6,633.43 crores towards License Fee on its Adjusted Gross Revenue (AGR) for the financial years 2006-07 till 2017-18.

The demands received by the Company included an amount of $\bar{\xi}$ 5,433.70 crores which were disallowed by the DOT towards the cost adjusted to Gross Revenues by the Company that were claimed on 'accrual basis' instead of payment basis, for which revised statements on the basis of actual payment has been submitted to the DOT. Though, the Company believes that it has a case to defend, it has made a provision of ₹337.17 crores during the quarter ended March 31, 2020 and for the balance amount of ₹5,096.53 crores, the Company believes that the likelihood of the same materializing is remote since the deduction on payment basis has not been considered by the DOT. During the quarter ended March 31, 2021, the Company has made a payment of $\bar{\tau}$ 379.51 crores under protest to DOT.

With respect to demands for the balance amount of $\bar{\xi}$ 1,199.73 crores, the Company has existing appeals relating to its ILD & NLD licenses which were filed in the past and are pending at the Hon'ble Supreme Court and Hon'ble Madras High Court and the Company's appeals are not included in the Hon'ble Supreme Court ruling of October 24, 2019 on AGR. Further, the Company believes that all its licenses are different from UASL, which was the subject matter of Supreme Court judgement of October 24, 2019. The Company has responded to the DOT denying and disputing the amounts claimed by the DOT in the above mentioned demands. The Company has not received any response from the DOT after the submission. 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 $\bar{\tau}$ 1,199.73 crores as part of contingent liability.

    1. The company has investment in its subsidiary Tata Communications Payment Solutions Limited (TCPSL') and its carrying value is ₹ 953.03 crs as on Jun 30, 2021. RBI has increased the Inter Bank Rate (IBR) with effect from August 01, 2021. TCPSL has revised its Business Plan on the basis of increase in IBR as notified by RBI and its internal assessment. Based on the revised business plan, the management is of the view that the carrying value of the investment in TCPSL as at June 30, 2021 is appropriate.
    1. The outbreak of Coronavirus (Covid-19) pandemic globally and in India has caused and continues to cause significant variation in the economic activity. The Company has considered internal and external information while finalizing various estimates. The Company will continue to closely monitor any changes in future economic conditions and assess its impact on the operations.
    1. Previous periods' figures have been reclassified wherever necessary to conform to the current period classifications/disclosures.

TATA COMMUNICATIONS LIMITED

REGD. OFFICE: VSB, M.G. ROAD, FORT, MUMBAI-400001.

$(\bar{\bar{\zeta}})$ in crores)

C. STATEMENT OF CONSOLIDATED FINANCIAL RESULTS FOR THE QUARTER ENDED JUNE 30, 2021

Particulars For the quarter ended For the year
ended
June 30 2021 March 31 2021 June 30 2020 March 31 2021
(Unaudited) (Refer Note 2) (Unaudited) (Audited)
1 Income from operations 4,102.79 4,073.25 4,402.94 17,100.10
$\overline{2}$ Other income, net 13.35 57.70 14.74 156.76
3 Total income $(1 + 2)$ $\overline{4,}116.14$ 4,130.95 4,417.68 17,256.86
4 Expenses
a. Network and transmission expense 1,561.89 1,461.46 1,780.40 6,513.66
b. Employee benefits expense 809.69 754.70 762.44 3,049.09
c. Finance costs 96.21 93.07 116.29 420.20
d. Depreciation and amortisation expense 531.76 595.03 589.93 2,313.87
e. Other expenses 745.16 841.90 818.34 3,276.77
Total expenses (4a to 4e) 3,744.71 3,746.16 4,067.40 15,573.59
5 Profit before exceptional items, tax & share of 371.43 384.79 350.28 1,683.27
profit/(loss) of associates $(3 - 4)$
6 Exceptional items (Refer note 3) 5.62 1.15 (10.49) (74.72)
7 Profit/(Loss) from operations before tax and share of 377.05 385.94 339.79 1,608.55
profit/(loss) of associates $(5 + 6)$
8 Tax expense/ (benefit):
a. Current tax 93.84 61.75 118.82 406.49
b. Deferred tax (14.57) 25.46 (37.61) (51.60)
9 Profit/(loss) before share of profit/(loss) of associates
$(7 - 8)$		 297.78 298.73 258.58 1,253.66
10 Share in Profit/(Loss) of associates (0.88) 0.50 (0.51) (2.14)
11 Profit/ (loss) for the period $(9 + 10)$ 296.90 299.23 258.07 1,251.52
Attributable to:
Equity holders of the parent 296.11 299.20 257.80 1,250.63
Non-controlling interest 0.79 0.03 0.27 0.89
12 Other Comprehensive Income/(loss) (net of tax) (177.88) (28.68) (26.64) 257.19
13 Total Comprehensive income/(loss) (11+12) 119.02 270.55 231.43 1,508.71
Attributable to:
Equity holders of the parent 118.23 270.52 231.16 1,507.82
Non-controlling interest 0.79 0.03 0.27 0.89
14 Paid up equity share capital (Face value of $\bar{x}$ 10 per share) 285.00 285.00 285.00 285.00
15 Reserves excluding Revaluation reserve (375.60)
16 Earnings per share (of $\bar{\tau}$ 10/- each) (not annualised)
Basic and diluted earnings per share $(\bar{\mathbf{z}})$ 10.39 10.50 9.05 43.88

D. Consolidated Business Segment Information:

i. Consolidated Segment wise revenue and results:

$(\bar{\tau}$ in crores)
Particulars For the quarter ended For the year
ended
June 30 2021 March 31 2021 June 30 2020 March 31 2021
(Unaudited) (Refer Note 2) (Unaudited) (Audited)
Income from operations
Voice Solutions 589.18 558.27 799.32 2,790.77
Data and Managed Services 3,435.60 3,429.82 3,509.36 13,931.29
Payment Solutions 37.58 45.93 52.25 215.37
Real Estate 42.78 45.50 45.81 179.67
Less: Inter Segment Revenue (2.35) (6.27) (3.80) (17.00)
Total 4,102.79 4,073.25 4,402.94 17,100.10
Segment result
Voice Solutions 19.94 27.37 57.66 136.47
Data and Managed Services 417.61 381.13 397.32 1,806.89
Payment Solutions (10.33) (17.93) (32.34) (107.58)
Real Estate 27.07 29.59 29.19 110.93
Total 454.29 420.16 451.83 1,946.71
Less:
(i) Finance Costs 96.21 93.07 116.29 420.20
(ii) Other un-allocable (income) net (18.97) (58.85) (4.25) (82.04)
of un-allocable expenditure
Profit before tax 377.05 385.94 339.79 1,608.55

ii. Consolidated Segment Assets and Liabilities:

$(\overline{\mathfrak{k}})$ in crores)
Particulars As at
June 30 2021 March 31 2021 June 30 2020
(Unaudited) (Audited) (Unaudited)
Segment Assets
Voice Solutions 407.65 397.46 497.98
Data and Managed Services 14,721.68 14,333.89 16,092.84
Payment Solutions 286.73 299.58 366.65
Real Estate 409.59 404.80 473.57
15,825.65 15,435.73 17,431.04
Unallocated Assets 4,985.13 5,897.68 5,583.34
Total Segment Assets 20,810.78 21,333.41 23,014.38
Segment Liabilities
Voice Solutions 620.46 622.07 801.59
Data and Managed Services 9,137.13 9,219.51 10,283.44
Payment Solutions 211.13 217.64 239.95
Real Estate 82.40 79.68 115.26
10,051.12 10,138.90 11,440.24
Unallocated Liabilities 10,897.88 11,050.88 12,617.55
Total Segment Liabilities 20,949.00 21,189.78 24,057.79

iii. Notes to Segments:

The Group's (the Company and its subsidiaries together referred to as "the Group") operating segments comprise of Voice Solutions, Data and Managed Services, Payment Solutions and Real Estate. The composition of the operating segments is as follows:

Voice Solutions includes International and National Long Distance Voice services.

Data and Managed Services includes corporate data transmission services, virtual private network, signaling and roaming services, television and other network and managed services, data center services.

Payment Solutions includes end-to-end ATM deployment, end-to-end POS enablement, hosted core banking, end to end financial inclusion and card issuance and related managed services and switching services to banking sector carried out by the Company's wholly owned subsidiary Tata Communications Payment Solutions Limited.

Real Estate segment includes lease rentals for premises given on lease.

Notes to consolidated financial results:

    1. The above consolidated unaudited results of the Group for the quarter ended June 30, 2021 have been subjected to a limited review by the statutory auditors. These results have been reviewed by the audit committee and taken on record and approved by the Board of Directors at their meeting held on August 04, 2021.
    1. The figures of the quarter ended March 31, 2021 are the balancing figures between the audited figures in respect of the full financial year ended March 31,2021 and the published figures of nine months ended December 31, 2020, which were subjected to limited review by the statutory auditors.
    1. Details of exceptional items are listed below
$(\bar{z}$ in crores)
For the year
Particulars For the quarter ended ended
June 30 March 31 June 30 March 31 2021
2021 2021 2020
1. Gain on sale of assets held for sale (refer note a) $\overline{\phantom{a}}$ 67.38
2. Provision towards License Fee (Refer note b) $\overline{\phantom{0}}$ (4.16) (10.49) (37.88)
3. Staff cost optimization (Refer note c) 5.62 (18.94) $\overline{\phantom{0}}$ (128.47)
4. Insurance claim (Refer note d) $\overline{\phantom{a}}$ 24.25 24.25
Total 5.62 1.15 (10.49) (74.72)
  • a) During the year ended March 31, 2021, the Company concluded the sale off a parcel of its land along with building on such land, for a total consideration of $\bar{\tau}$ 67.41 crores (net of transaction cost) resulting into a gain of $\bar{\tau}$ 67.38 crores. These assets were disclosed under assets held for sale.
  • b) During the year ended March 31,2020 the company made a provision towards license fees of $\bar{\zeta}$ 341.64 crores which includes $\overline{3}37.17$ crores towards the period covered in the DOT demand (Refer note 4a). Further for the quarter and year ended March 31, 2021, the Company made a provision of ₹4.16 crores and ₹37.88 crores towards interest on the unpaid provisions and made a payment of $\bar{\xi}$ 379.51 crores under protest to DOT.
  • c) As part of its initiative to enhance the long-term efficiency of the business, the Group undertook organisational changes to align to the Group's current and prospective business requirements. These changes involved certain positions in the Group becoming redundant.
  • d) During the quarter and year ended March 31, 2021, the Company has recognized an insurance claim of ₹24.25 crores against loss caused due to malfunctioning of the fire suppression system in earlier years.
  • a) During the quarter ended September 30, 2019, the Company had received demands from Department of 4. Telecommunications (DOT) aggregating to $\bar{\xi}$ 6,633.43 crores towards License Fee on its Adjusted Gross Revenue (AGR) for the financial years 2006-07 till 2017-18.

The demands received by the Company included an amount of $\bar{\xi}$ 5,433.70 crores which were disallowed by the DOT towards the cost adjusted to Gross Revenues by the Company that were claimed on 'accrual basis' instead of payment basis, for which revised statements on the basis of actual payment has been submitted to the DOT. Though, the Company believes that it has a case to defend, it has made a provision of ₹ 337.17 crores during the quarter ended March 31, 2020 and for the balance amount of $\bar{\xi}$ 5,096.53 crores, the Company believes that the likelihood of the same materializing is remote since the deduction on payment basis has not been considered by the DOT. During the quarter ended March 31, 2021, the Company has made a payment of $\bar{\xi}$ 379.51 crores under protest to DOT.

With respect to demands for the balance amount of $\bar{\tau}$ 1,199.73 crores, the Company has existing appeals relating to its ILD & NLD licenses which were filed in the past and are pending at the Hon'ble Supreme Court and Hon'ble Madras

High Court and the Company's appeals are not included in the Hon'ble Supreme Court ruling of October 24, 2019 on AGR. Further, the Company believes that all its licenses are different from UASL, which was the subject matter of Supreme Court judgement of October 24, 2019. The Company has responded to the DOT denying and disputing the amounts claimed by the DOT in the abovementioned demands. The Company has not received any response from the DOT after the submission. 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 $\bar{\tau}$ 1,199.73 crores as part of contingent liability.

b) During year ended March 31, 2021 an associate considered certain provision in its financials, the Group has considered the same as contingent liability which is consistent with the treatment of similar item in its financials and accordingly adjusted its share of profit/(loss) in associate by $\bar{\tau}$ 24.40 crores (net of tax). The Groups share of profit in the associate after this adjustment is $\bar{\tau}$ 6.55 crores. The Group has obtained a legal opinion in this regard.

  • During the quarter ended September 30, 2019, a subsidiary domiciled abroad, has received a final VAT assessment from 5. VAT authorities for ₹ 136.98 crores, during the quarter ended December 31, 2019 a final penalty assessment of ₹ 159.92 crores was also received. On July 1, 2020 the Group has filed its grounds for appeal with the Economic Administrative Court towards the final VAT and penalty assessment which is currently pending for hearing. The management believes that there are grounds to defend its position and has also obtained an external opinion in this regard.
    1. The outbreak of Coronavirus (Covid-19) pandemic globally and in India has caused and continues to cause significant variation in the economic activity. The Group has considered internal and external information while finalizing various estimates. The Group will continue to closely monitor any changes in future economic conditions and assess its impact on the operations
    1. Previous periods' figures have been rearranged wherever necessary to conform to the current period classifications/disclosures.

For TATA COMMUNICATIONS LIMITED

IAMUR Digitally signed by
ISWAMINATHAN AMUR SWAMINATHAN
LAKSHMINARA LAKSHMINARAYANAN
Date: 2021.08.04
YANAN 16:05:00 +05'30'

AMUR S. LAKSHMINARAYANAN MANAGING DIRECTOR & CEO

Place: Mumbai Date: August 04, 2021

Chartered Accountants

12th Floor, The Ruby 29 Senapati Bapat Marg, Dadar (West) Mumbai - 400 028, India Tel: +91 22 6819 8000

Independent Auditor's Review Report on the Quarterly and Year to Date Unaudited Standalone Financial Results of the Company Pursuant to the Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended

Review Report to The Board of Directors Tata Communications Limited

    1. We have reviewed the accompanying statement of unaudited standalone financial results of Tata Communications Limited (the "Company") for the quarter ended June 30, 2021 and year to date from April 01, 2021 to June 30, 2021 (the "Statement") attached herewith, being submitted by the Company pursuant to the requirements of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (the "Listing Regulations").
    1. This Statement, which is the responsibility of the Company's Management and approved by the Company's Board of Directors, has been prepared in accordance with the recognition and measurement principles laid down in Indian Accounting Standard 34 (Ind AS 34) "Interim Financial Reporting" prescribed under Section 133 of the Companies Act, 2013 as amended, read with relevant rules issued thereunder and other accounting principles generally accepted in India. Our responsibility is to express a conclusion on the Statement based on our review.
    1. We conducted our review of the Statement in accordance with the Standard on Review Engagements (SRE) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Institute of Chartered Accountants of India. This standard requires that we plan and perform the review to obtain moderate assurance as to whether the Statement is free of material misstatement. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. 4. Based on our review conducted as above, nothing has come to our attention that causes us to believe
  • that the accompanying Statement, prepared in accordance with the recognition and measurement principles laid down in the aforesaid Indian Accounting Standards ('Ind AS') specified under Section 133 of the Companies Act, 2013 as amended, read with relevant rules issued thereunder and other accounting principles generally accepted in India, has not disclosed the information required to be disclosed in terms of the Listing Regulations, including the manner in which it is to be disclosed, or that it contains any material misstatement.

Chartered Accountants

Tata Communications Limited Limited Review Report – June 30, 2021

  1. As fully discussed in note 4 to the standalone financial results for the quarter ended June 30, 2021, the Company had received demands dated September 12, 2019 from Department of Telecommunications (DoT) towards license fee on its Adjusted Gross Revenue (AGR) for FY 2006-07 to 2017-18, for Rs 6,633.43 crores. Of this amount, the Company has provided Rs 337.17 crores with respect to the demand of Rs 5,433.70 crores and believes that the likelihood of the balance demand Rs 5,096.53 crores materializing is remote. Further, the Company has disclosed the demand of Rs 1,199.73 crores as part of contingent liability. The Company believes that it has grounds to defend its position and has also obtained a legal opinion in this regard. Our conclusion is not modified in this regard.

For S.R. BATLIBOI & ASSOCIATES LLP Chartered Accountants ICAI Firm registration number: 101049W/E300004

MASTER, c=IN, o=Personal, HORMUZ ERUCH MASTER

___________________________________ Digitally signed by HORMUZ ERUCH MASTER DN: cn=HORMUZ ERUCH [email protected]

per Hormuz Master Partner Membership No.: 110797 UDIN: 21110797AAAABQ3242 Mumbai August 04, 2021

Chartered Accountants

12th Floor, The Ruby 29 Senapati Bapat Marg, Dadar (West) Mumbai - 400 028, India Tel: +91 22 6819 8000

Independent Auditor's Review Report on the Quarterly and Year to Date Unaudited Consolidated Financial Results of the Company Pursuant to the Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended

Review Report to The Board of Directors Tata Communications Limited

    1. We have reviewed the accompanying Statement of Unaudited Consolidated Financial Results of Tata Communications Limited (the "Holding Company") and its subsidiaries (the Holding Company and its subsidiaries together referred to as "the Group") and its associates for the quarter ended June 30, 2021 and year to date from April 01, 2021 to June 30, 2021 (the "Statement") attached herewith, being submitted by the Holding Company pursuant to the requirements of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (the "Listing Regulations").
    1. This Statement, which is the responsibility of the Holding Company's Management and approved by the Holding Company's Board of Directors, has been prepared in accordance with the recognition and measurement principles laid down in Indian Accounting Standard 34, (Ind AS 34) "Interim Financial Reporting" prescribed under Section 133 of the Companies Act, 2013 as amended, read with relevant rules issued thereunder and other accounting principles generally accepted in India. Our responsibility is to express a conclusion on the Statement based on our review.
    1. We conducted our review of the Statement in accordance with the Standard on Review Engagements (SRE) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Institute of Chartered Accountants of India. This standard requires that we plan and perform the review to obtain moderate assurance as to whether the Statement is free of material misstatement. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. 4. The Statement includes the results of the entities as referred to in the Annexure. 5. Based on our review conducted and procedures performed as stated in paragraph 3 above and based on

We also performed procedures in accordance with the Circular No. CIR/CFD/CMD1/44/2019 dated March 29, 2019 issued by the Securities and Exchange Board of India under Regulation 33(8) of the Listing Regulations, to the extent applicable.

  • the consideration of the review report of other auditor referred to in paragraph 8, nothing has come to our attention that causes us to believe that the accompanying Statement, prepared in accordance with recognition and measurement principles laid down in the aforesaid Indian Accounting Standards ('Ind AS') specified under Section 133 of the Companies Act, 2013, as amended, read with relevant rules issued thereunder and other accounting principles generally accepted in India, has not disclosed the information required to be disclosed in terms of the Listing Regulations, including the manner in which it is to be disclosed, or that it contains any material misstatement.

Tata Communications Limited Limited Review Report – June 30, 2021

    1. As fully discussed in note 4 to the consolidated financial results for the quarter ended June 30, 2021, the Holding Company had received demands dated September 12, 2019 from Department of Telecommunications (DoT) towards license fee on its Adjusted Gross Revenue (AGR) for FY 2006-07 to 2017-18, for Rs 6,633.43 crores. Of this amount, the Holding Company has provided Rs 337.17 crores with respect to the demand of Rs 5,433.70 crores and believes that the likelihood of the balance demand of Rs 5,096.53 crores materializing is remote. Further, the Holding Company has disclosed the demand of Rs 1,199.73 crores and Rs 24.40 crores on estimated basis with respect to equity share in an associate company for a similar matter, as part of contingent liability. The Holding Company believes that it has grounds to defend its position and has also obtained a legal opinion in this regard. Our conclusion is not modified in this regard. 7. We draw attention to note 5 to the consolidated financial results for the quarter ended June 30, 2021, 8. The accompanying Statement includes the unaudited interim financial results and other financial
  • which describes the uncertainty related to the outcome of the ongoing tax litigation of Rs. 296.90 crores, in one of the subsidiaries of the Group. The Group is confident of defending its position and has obtained legal opinion in this regard. Our conclusion is not modified in this regard.
  • information, in respect of a subsidiary, whose unaudited interim financial results include total revenues of Rs 14.31 crores, total net profit after tax of Rs 3.08 crores, total comprehensive income of Rs 4.05 crores, for the quarter and period ended June 30, 2021 as considered in the Statement which have been reviewed by their respective independent auditor. The independent auditor's report on interim financial results of this entity have been furnished to us by the Management and our conclusion on the Statement, in so far as it relates to the amounts and disclosures in respect of this subsidiary is based solely on the report of such auditor and procedures performed by us as stated in paragraph 3 above. 9. The accompanying Statement includes unaudited interim financial results and other unaudited financial
  • information in respect of two subsidiaries, whose interim financial results and other financial information reflect total revenues of Rs 9.90 crores, total net profit after tax of Rs. 1.36 crores, total comprehensive income of Rs. 1.81 crores, for the quarter and period ended June 30, 2021 and three associates whose interim financial results includes the Group's share of net loss of Rs. 0.88 cores and Group's share of total comprehensive loss of Rs. 0.91 crores for the quarter and period ended June 30, 2021. The unaudited interim financial results and other unaudited financial information of the these subsidiaries and associates have not been reviewed by their auditors and have been approved and furnished to us by the Management and our conclusion on the Statement, in so far as it relates to the affairs of these subsidiaries and associates, is based solely on such unaudited interim financial results and other unaudited financial information. According to the information and explanations given to us by the Management, these interim financial results are not material to the Group.

Our conclusion on the Statement in respect of matters stated in para 8 and 9 is not modified with respect to our reliance on the work done and the report of the other auditor and the financial results and other financial information approved and furnished to us by the Management.

For S.R. BATLIBOI & ASSOCIATES LLP Chartered Accountants ICAI Firm registration number: 101049W/E300004 _______________________ per Hormuz Master Digitally signed by HORMUZ ERUCH MASTER DN: cn=HORMUZ ERUCH MASTER, c=IN, o=Personal, [email protected] HORMUZ ERUCH MASTER

Partner Membership No.: 110797 UDIN: 21110797AAAABR9257 Mumbai August 04, 2021

Tata Communications Limited Limited Review Report – June 30, 2021

Annexure to Independent Auditor's Review Report on the Quarterly and Year to Date Unaudited Consolidated Financial Results of the Company Pursuant to the Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended

List of Subsidiaries and Associates

Subsidiaries

    1. Tata Communications (America) Inc.
    1. Tata Communications (Australia) Pty Limited
    1. Tata Communications (Beijing) Technology Limited
    1. Tata Communications (Belgium) SRL
    1. Tata Communications (Bermuda) Limited
    1. Tata Communications (Brazil) Participacoes Limitada
    1. Tata Communications (Canada) Ltd.
    1. Tata Communications (France) Sas
    1. Tata Communications (Guam) L.L.C.
    1. Tata Communications (Hong Kong) Limited
    1. Tata Communications (Hungary) KFT
    1. Tata Communications (Ireland) Dac
    1. Tata Communications (Italy) S.R.L
    1. Tata Communications (Japan) K.K.
    1. Tata Communications (Malaysia) Sdn. Bhd.
    1. Tata Communications (Middle East) Fz-LLC
    1. Tata Communications (Netherlands) B.V.
    1. Tata Communications (New Zealand) Limited
    1. Tata Communications (Nordic) As
    1. Tata Communications (Poland) Sp. Z O. O.
    1. Tata Communications (Portugal) Instalação E Manutenção De Redes, Lda
    1. Tata Communications (Portugal), Unipessoal Lda
    1. Tata Communications (Russia) LLC.
    1. Tata Communications (South Korea) Limited
    1. Tata Communications (Spain), S.L.
    1. Tata Communications (Sweden) Ab
    1. Tata Communications (Switzerland) Gmbh
    1. Tata Communications (Taiwan) Ltd
    1. Tata Communications (Thailand) Limited
    1. Tata Communications (Uk) Limited
    1. Tata Communications Collaboration Services Pvt Limited
    1. Tata Communications Comunicações E Multimídia (Brazil) Limitada
    1. Tata Communications Deutschland Gmbh
    1. Tata Communications International Pte. Ltd.
    1. Tata Communications Lanka Limited
    1. Tata Communications Move B.V.
    1. Tata Communications Move Nederland B.V.
    1. Tata Communications Move Uk Limited
    1. Tata Communications Payment Solutions Limited
    1. Tata Communications Services (International) Pte. Ltd.
    1. Tata Communications Svcs Pte Ltd
    1. Tata Communications Transformation Services (Hungary) Kft.
    1. Tata Communications Transformation Services (Us) Inc
    1. Tata Communications Transformation Services Limited
    1. Tata Communications Transformation Services Pte Limited
    1. Tata Communications Transformation Services South Africa (Pty) Ltd

Tata Communications Limited Limited Review Report – June 30, 2021

    1. Tc Iot Managed Solutions Limited (Applied For Strike Off On 29.11.2019)
    1. Tcpop Communication Gmbh
    1. Tcts Senegal Limited
    1. Vsnl Snospv Pte. Ltd.
    1. Itxc Ip Holdings S.A.R.L.
    1. Mucoso B.V.
    1. Netfoundry Inc.
    1. Nexus Connexion (Sa) Pty Limited
    1. Sepco Communications (Pty) Limited
    1. Oasis Smart Sim Europe SAS
    1. Oasis Smart E-Sim Pte. Ltd

Associates

    1. STT Global Data Centres India Private Limited
    1. Smart ICT Services Private Limited
    1. United Telecom Limited

PRESS RELEASE

Tata Communications delivers +14.9% YoY PAT

Q1 FY22 PAT at INR 296 Crores I Focus on profitability with EBITDA margin expansion of 40 BPs YoY

Mumbai – 4 th August 2021 - Tata Communications, a global digital ecosystem enabler, today announces its financial results for the quarter ended 30th June 2021.

Highlights | Q1 FY2022

Consolidated financial highlights

  • Consolidated revenue came in at INR 4,103 Crore (USD 556 Mn), growth of +0.7% Quarter-on-Quarter (QoQ), and 6.8% decrease Year-on-Year (YoY). This YoY contraction is primarily due to reduction in Voice business and moderation of Collaboration traffic in the Data segment
  • Consolidated EBITDA stood at INR 986 Crore (USD 134 Mn); reduction of 5.3% YoY. This quarter, EBITDA has been impacted by a provision of INR 33 Crore on account of license fee on revenue from pure internet services which was allowed as deduction in the definition of Adjusted Gross Revenue (AGR) earlier. Despite this impact EBITDA margin has expanded by 40 BPs YoY
  • Consolidated Profit After Tax (PAT) is at INR 296 Crore (USD 40 Mn) for Q1 FY22 as compared to a profit of INR 258 Crore in Q1 FY21, registering a growth of 14.9% YoY
  • CAPEX for this quarter grew to INR 381 Crore as compared to INR 372 Crore in Q1 FY21
Consolidated Nos. INR Crore YoY Growth
Gross Revenue 4,103 (6.8%)
EBITDA 986 (5.3%)
EBITDA margin 24.0% 40 BPs
PAT 296 14.9%

Consolidated revenue

Consolidated EBITDA

Data services portfolio

  • Data business revenue came in at INR 3,104 Crore witnessing a growth of + 0.6% QoQ and a -2.2% YoY reduction. Data business continues to be affected by COVID related slowdown. Enterprise decisions have been slow due to macroeconomic headwinds leading to longer lead time for deal wins. Service delivery was affected by lockdowns during the 2 nd Wave of COVID-19 pandemic
  • EBITDA for the segment stood at INR 932 Crore; up +0.4% QoQ and decline of -2.4% YoY. EBITDA was affected by provision of license fee made during the quarter and despite this impact EBITDA margin is maintained at 30%.
  • In Core Connectivity, there is a healthy growth in revenue by +1.7% YoY, and EBITDA increased by +0.3% YoY with margins at 42.6%
  • Digital Platforms and Services were affected by moderation of Collaboration traffic which was at its peak in Q1 FY21. Revenue strengthened by 2.9% QoQ but reduced by -12.8% YoY. There are early signs of recovery and an uptake of usage based services in geographies where economies have opened

"In a challenging quarter impacted by the second wave of COVID-19, we have delivered a robust performance," said A S Lakshminarayanan, Managing Director and CEO, Tata Communications. "The global markets are slowly opening up and we are witnessing greenshoots of demand recovery."

He added, "Our focus is to continue investing in developing innovative digital ecosystem solutions driven by customers' needs. Early demand for our recent launches for live sports on our Media Edge Cloud and IZOTM Financial Cloud is testament that we are moving in the right direction."

Commenting on the results, Kabir Ahmed Shakir, Chief Financial Officer, Tata Communications, said, "Our focus on growth and profitability continues to deliver results. A healthy profit and free cash flow is empowering us to innovate and accelerate growth while streamlining processes and bringing in further efficiencies. We are well-poised to enable enterprises make the shift with digitalisation playing a pivotal role enabling businesses derive positive growth."

An investor fact sheet providing detailed analysis of the results for the quarter ended 30th June 2021 has been uploaded on the Tata Communications website and can be accessed here.

Media Contact: Investor Contact: Arati Mukerji Vipul Garg Tata Communications Tata Communications +91 9958895759 +91 11 66257431 [email protected] [email protected]

About Tata Communications

A part of the Tata Group, Tata Communications (NSE: TATACOMM; BSE: 500483) is a global digital ecosystem enabler powering today's fast-growing digital economy in more than 190 countries and territories. Leading with trust, it enables digital transformation of enterprises globally with collaboration and connected solutions, core and next gen connectivity, cloud hosting and security solutions and media services. 300 of the Fortune 500 companies are its customers and the company connects businesses to 80% of the world's cloud giants. Its Tier-1 IP network, wholly-owned subsea fibre backbone and consortium cables' global network carries ~30% of the world's internet routes. For more information please visit www.tatacommunications.com

Forward-looking and cautionary statements

Certain words and statements in this release concerning Tata Communications and its prospects, and other statements, including those relating to Tata Communications' expected financial position, business strategy, the future development of Tata Communications' operations, and the general economy in India, are forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors, including financial, regulatory and environmental, as well as those relating to industry growth and trend projections, which may cause actual results, performance or achievements of Tata Communications, or industry results, to differ materially from those expressed or implied by such forward-looking statements. The important factors that could cause actual results, performance or achievements to differ materially from such forward-looking statements include, among others, failure to increase the volume of traffic on Tata Communications' network; failure to develop new products and services that meet customer demands and generate acceptable margins; failure to successfully complete commercial testing of new technology and information systems to support new products and services, including voice transmission services; failure to stabilize or reduce the rate of price compression on certain of the company's communications services; failure to integrate strategic acquisitions and changes in government policies or regulations of India and, in particular, changes relating to the administration of Tata Communications' industry; and, in general, the economic, business and credit conditions in India. Additional factors that could cause actual results, performance or achievements to differ materially from such forward-looking statements, many of which are not in Tata Communications' control, include, but are not limited to, those risk factors discussed in Tata Communications Limited's Annual Reports.

The Annual Reports of Tata Communications Limited are available at www.tatacommunications.com. Tata Communications is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements.

© 2021 Tata Communications Ltd. All rights reserved.

TATA COMMUNICATIONS and TATA are trademarks or registered trademarks of Tata Sons Private Limited in India and certain countries.

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