Amur S Lakshminarayanan, the Managing Director and CEO of Tata Communications is confident the company will be able to restore its core business margins to the 23-25% range in the medium term.

He said Kaleyra has a negative EBITDA (earnings before interest, tax, depreciation, and amortisation), which will weigh on margins. However, he expects Kaleyra to turn around in a year.

In June this year, Tata Communications acquired Kaleyra Inc, a US-based company listed on the New York Stock Exchange, in an all-cash deal. The agreement specified a price per share of $7.25, resulting in a total consideration of approximately $100 million, inclusive of the assumption of all outstanding debt, as outlined in an exchange filing.

Kaleyra is a global omnichannel integrated communication services provider with a set of proprietary platforms, offering targeted personalisation through messaging, video, push notifications, e-mail and voice-based services, and chatbots.

Other factors that affected margins for the quarter were investments in human resources, mergers and acquisitions, and consolidation of its earlier acquisition, Switch Enterprises. He expects Switch also to turnaround in the coming year.

Tata Communications (Netherlands) B.V., a wholly-owned indirect subsidiary of Tata Communications had acquired a 100% stake in Switch Enterprises LLC. in December 2022 for a total cash consideration of $58.8 million or Rs 486.3 crore.

Tata Communications on October 19 reported a 58% year-on-year (YoY) decline in net profit at ₹221.3 crore for the second quarter that ended September 30, 2023. Total revenue for the quarter stood at ₹4,872.5 crore, up 10% from ₹4,430.74 crore last year.

Also Read | Tata Communications CEO addresses margin decline, says focus is on product mix optimisation

(Edited by : Shweta Mungre)

First Published:Oct 20, 2023 3:32 PM IST