Tata Communications Q3 profit rises 55% YoY to Rs 365 crore

Tata Communications has reported a consolidated net profit of Rs 365 crore for the quarter ended 31 December 2025, marking a 55% year-on-year increase, driven by strong data services revenue, a healthy order book, and an expansion in profit margins.

On a sequential basis, net profit nearly doubled from Rs 183 crore in the previous quarter. Revenue rose 6.7% year-on-year to Rs 6,189 crore, up from Rs 5,798 crore a year earlier. Sequentially, revenue grew 1.4% from Rs 6,100 crore in the July–September quarter.

Data services accounted for nearly 87% of total revenue at Rs 5,359 crore, up 9.3% from the corresponding period last year. Voice solutions revenue declined 9% year-on-year to Rs 373 crore, compared with Rs 410.5 crore in the same quarter a year ago, and down from Rs 406 crore in the previous quarter.

The data services business comprises core connectivity, digital platforms, and connected services, while the voice solutions segment includes international and national long-distance voice services.

The company attributed its strong third-quarter performance to a disciplined focus on data-led growth, expanding margins, and a healthy order book.

Highlighting that the company is gaining momentum across the business, Tata Communications Managing Director and Chief Executive Officer A S Lakshminarayanan said, “The investments in capability shifts are translating into stronger products and sharper execution for customers.”

Data Services Growth Offsets Decline in Voice Business

“We are seeing a momentum across the data business driven by core connectivity as well as digital portfolio. Our funnel remains robust, and about 70% is contributed by the digital portfolio,” Lakshminarayanan said in a post-earnings conference call with analysts.

He also indicated that the company has a steady uptick in the number of million-dollar customers, especially in the USD 10 million-plus category.

Earnings before interest, tax, depreciation, and amortisation (EBITDA) for the quarter rose 4% year-on-year to Rs 1,228 crore, up from Rs 1,181 crore in the year-ago period, ending December 2024. For the quarter ended 30 September, EBITDA stood at Rs 1,174 crore.

EBITDA margins, however, were under pressure, declining by 52 basis points (bps) year-on-year to 19.8%, from 20.4% in the corresponding quarter of the previous fiscal. On a sequential basis, the EBITDA margins improved by 60 bps from 19.2% end of September 2025.

Overall, the company’s net profit margins rose 148 bps year-on-year to 5.9% in the third quarter from 4.4% in the same period last year.

“Q3 has been a strong quarter with robust revenue growth and steadily improving margins, reflecting disciplined execution across the business. Our continued focus on capital efficiency has strengthened the balance sheet and is funding our growth priorities,” said Kabir Ahmed Shakir, Chief Financial Officer.

“We are confident of our direction, and our ‘Fit to Grow’ strategy allows us to build on the momentum we are seeing across.”

The company also reported a one-time exceptional cost of Rs 61 crore related to the implementation of the new labour codes announced by the central government in November 2025.

The charge reflects an actuarial valuation of gratuity and long-term compensated absences following changes to the definition of wages, the company said in its stock exchange filing.

Implementation of the labour codes has significantly impacted profitability across the IT sector, including TCS, HCLTech, Infosys, Wipro, Tech Mahindra, and LTI Mindtree. Disclosures and regulatory filings by the top six IT firms indicate a combined one-time exceptional cost of nearly Rs 5,400 crore during the third quarter.

Also Read

Ganesh Lakshminarayanan named CEO-designate at Tata Comms
Tata Communications introduces speech AI solution
Tata Communications enables BSNL’s nationwide eSIM launch