GICS Industry : Diversified Telecommunication l Sub Industry : Integrated Telecommunication l Website : www.tatacommunications.

com

Tata Communications Ltd

Key Stock Indicators
NSE Ticker : Bloomberg Ticker : Face value / Share: Div. Yield (%): TATACOMM TCOM:IN 10.0 0.0 CMP (as on 16 Dec 2010Rs/share): 52-week range up to 16 Dec 2010 (Rs)(H/L): Market Cap as on 16 Dec 2010 (Rs mn): Enterprise Value as on 16 Dec 2010 (Rs mn): 250.6 371.15/235.55 71,421 141,801 Shares outstanding (mn) : Free Float (%) : Average daily volumes (12 months) : Beta (2 year) : 285.0 23.9 260,183 0.9

Tata Communications Ltd (formerly VSNL) (TCL) was incorporated in 1986; it provides international long-distance service, international private leased circuit, frame relay, managed data network, internet, internet telephony, national long distance, IP based virtual private network and TV uplinking services with pan India presence.

Key Financial Indicators

Revenue (Rs mn) EBITDA ma rgins (%) PAT (Rs mn) PAT ma rgins (%) Gea ring (x) EPS (Rs /s ha re) PE (x) P/BV (x) RoCE (%) RoE (%) EV/EBITDA (x)
n.m. : Not meaningful

KEY HIGHLIGHTS
Presence in all mobile circles in India TCL is the fifth largest mobile service provider with a presence in all 23 circles. For GSM segment, the company had around 73 million subscribers in June 2010 with market share of around 12%, while for CDMA; the subscriber base was around 40 million with market share of around 37% as at June 2010. One of the largest providers of submarine cable bandwidth TCL is one of the worlds largest provider of submarine cable bandwidth and international wholesale voice service provider with cable network of more than 2,00,000 route kilometers and internet protocol (IP) with more than 200 countries across 400 points of presence (PoPs), and nearly 1 million square feet of data centre and collection space worldwide.

Mar-08 Mar-09 Mar-10 84,150.0 100,718.9 110,822.5 11.9 14.7 9.1 -320.4 1,758.8 -6,867.9 -0.4 1.7 -6.2 0.8 1.5 1.8 -1.1 6.2 -24.1 n.m 84.0 n.m 3.2 3.3 1.8 4.1 8.0 0.3 -0.7 3.9 -16.0 17.8 14.0 14.1

Shareholding (As on September 30, 2010) KEY RISKS

FII 1% DII 13% Others 10%

Intense tariff based competition in the industry Mobile Number Portability (MNP)

Stock Performances vis--vis market

Returns (%) YTD TATACOMM NIFTY
Note: 1) YTD returns are since April 1, 2010 to Dec 16, 2010. 2) 1-m, 3-m and 12-m returns are up to Dec 16, 2010.

1-m -15 -1

3-m -24 2

12-m -26 18
Promoter 76%

-11 12

Indexed price chart

(index) 140 120 100 80 60 40 20 0 1000 0 3000 2000 ('000) 5000 4000

Dec-09

Jun-10

Oct-10

Mar-10

Volumes (RHS)

May-10

TATACOMM

Nov-10
NIFTY

Apr-10

Feb-10

Jul-10

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Aug-10

Sep-10

Jan-10

Tata Communications Ltd

BACKGROUND
TCL, formerly known as VSNL, was incorporated following the corporatisation of the erstwhile Overseas Communications Services division of the Department of Telecommunications. It provides a wide range of telecommunications products and services in approximately 240 countries and territories around the world. Tata groups stake in this company remains at 50% while that of the government is 26%. It operates under three main business segments global voice, global enterprise and carrier data and other services. Global voice includes national and international voice services which accounts for 57% of FY10 sales. Global enterprise and data carrier includes corporate services like international private leased circuits, frame relay and forms 30% of FY10 sales. Other services include global roaming, internet, internet telephony and accounts for 13% of the FY10 sales.

COMPETITIVE POSITION
Peer Comparison

Revenue (Rs mn) EBITDA ma rgi ns (%) PAT (Rs mn) PAT ma rgins (%) Gea ri ng (x) EPS (Rs /s ha re) PE (x) P/BV (x) RoCE (%) RoE (%) EV/EBITDA (x)
n.m: Not meaningful

Tata Communications Ltd Idea Cellular Limited Mar-10 Mar-10 110,822.5 124,048.9 9.1 26.3 -6,867.9 9,711.1 -6.2 7.8 1.8 0.8 -24.1 2.9 n.m 23.1 1.8 2.3 0.3 9.4 -16.0 9.9 14.1 9.2

Mahanagar Telephone Reliance Tata teleservices Nigam Ltd. Communications Ltd (Maharashtra) Ltd Bharti Airtel Ltd. Mar-10 Mar-10 Mar-10 Mar-10 37,654.8 219,227.3 22,465.9 418,991.2 -79.4 34.7 23.6 40.1 -26,104.0 44,849.5 -3,180.0 93,615.2 -69.3 20.5 -14.2 22.3 1.4 -2.5 0.3 -41.4 21.7 -1.7 24.7 n.m 5.9 n.m 14.6 -5.0 1.3 -2.7 3.4 -51.1 7.6 1.7 23.3 -46.5 22.8 27.4 0.5 7.3 13.1 8.6

FINANCIAL PROFILE
Moderate growth in revenue, bottom line under pressure for FY10

Key Financial Indicators Units Revenue Rs mil li on Rs mil li on Per cent Per cent Per cent Ti mes Per cent Per cent EBITDA ma rgins Per cent PAT PAT ma rgi ns EBITDA growth PAT growth Gea ring RoCE RoE

Mar-08
84,150.0 11.9 -320.4 -0.4 -2.7 -9.0 -43.9 0.8 4.1 -0.7

Mar-09
100,718.9 14.7 1,758.8 1.7 19.7 47.7 648.9 1.5 8.0 3.9

Mar-10
110,822.5 9.1 -6,867.9 -6.2 10.0 -31.7 -490.5 1.8 0.3 -16.0

TCL reported operating revenue of Rs. 110 billion for FY10 as compared to Rs. 100 billion for FY09, a moderate growth of 10%. Slowdown in pace of growth is attributed to price war experienced by the wholesale voice service segment. Increase in network cost by around 22% reduced EBITDA by 56 basis points. Interest cost rose by around 60% on account of debentures issued during FY10, further Neotel (South Africa) which is still in early growth phase reported a loss of Rs. 4.6 billion consequently the net loss for TCL stood at Rs. 6.9 billion in FY10 vis a vis net profit of Rs. 1.7 billion in FY09.

Revenue growth Per cent

INDUSTRY PROFILE
Telecom Services Wireless The wireless segment has witnessed rapid growth in 2009-10, adding about 192 million subscribers. As of 31st March 2010, the total wireless subscriber base stood at 584 million as compared to 391 million subscribers at the end of March 2009, exhibiting the growth of 49 per cent y-o-y. Deeper penetration into existing areas and expansion into rural India has led to wider availability, while declining tariffs has increased affordability, resulting in proliferation of the service. However, the industry is characterised by severe competition which is expected to intensify further with service expansion of new licensees, implementation of mobile number portability (MNP) and launch of 3G services. Given the shift in the competitive landscape in the mobile services sector, driven by intense pricing pressure, profitability of existing players is expected to remain under pressure.

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Tata Communications Ltd

ANNUAL RESULTS
Income Statement (Rs million ) Net Sales Operating Income EBITDA EBITDA Margin Depreciation Interest Other Income PBT PAT PAT Margin No. of shares (Mn No.) Earnings per share (EPS) Cash flow (Rs million ) Pre-tax profit Total tax paid Depreciation Change in working capital Cash flow from operating activities Capital Expenditure Investments and others Cash flow from investing activities Equity raised/(repaid) Debt raised/(repaid) Dividend (incl. tax) Others (incl extraordinaries) Cash flow from financing activities Change in cash position Opening cash Closing cash
n.m : Not meaningful;

Mar-08 82,629.8 84,150.0 9,991.8 11.9 7,850.3 1,666.9 910.9 1,478.4 -320.4 -0.4 285.0 -1.1

Mar-09 99,631.7 100,718.9 14,761.4 14.7 11,028.7 3,669.9 1,174.7 4,140.5 1,758.8 1.7 285.0 6.2

Mar-10 110,255.6 110,822.5 10,088.0 9.1 15,112.5 5,862.2 1,677.0 -5,491.7 -6,867.9 -6.2 285.0 -24.1

Balance sheet (Rs million ) Equity share capital Reserves and surplus Tangible net worth Deferred tax liablity:|asset| Long-term debt Short-term-debt Total debt Current liabilities Total provisions Total liabilities Gross block Net fixed assets Investments Current assets Receivables Inventories Cash Total assets Ratio

Mar-08 2,850.0 42,440.3 45,290.3 998.2 1,318.9 32,846.0 34,164.9 52,694.2 3,641.3 136,788.9 80,562.4 78,375.8 12,043.8 46,369.3 20,745.6 92.9 2,940.7 136,788.9

Mar-09 2,850.0 42,532.5 45,382.5 1,559.0 18,251.0 49,892.7 68,143.7 73,253.9 4,392.9 192,732.0 118,303.3 110,902.5 16,760.4 65,069.1 28,629.7 178.3 8,759.3 192,732.0

Mar-10 2,850.0 37,810.4 40,660.4 1,981.2 28,488.5 44,732.3 73,220.8 71,045.2 3,676.4 190,584.0 143,221.7 116,557.9 13,041.8 60,984.3 21,877.5 418.8 2,841.1 190,584.0

Mar-08 1,385.5 -1,569.1 7,850.3 1,827.5 9,494.2 -22,412.2 5,592.2 -16,820.0 0.0 8,371.4 -1,500.5 941.6 7,812.5 486.7 2,454.0 2,940.7

Mar-09 1,237.5 -1,820.9 11,028.7 8,430.1 18,875.4 -43,025.4 -4,716.6 -47,742.0 -1,098.7 33,978.8 -1,500.5 3,305.6 34,685.2 5,818.6 2,940.7 8,759.3

Mar-10 -9,209.7 -954.0 15,112.5 -4,758.6 190.2 -19,782.4 3,718.6 -16,063.8 0.0 5,077.1 0.0 4,878.3 9,955.4 -5,918.2 8,759.3 2,841.1

Revenue growth (%) EBITDA growth(%) PAT growth(%) EBITDA margins(%) Tax rate (%) PAT margins (%) Dividend payout (%) Return on Equity (%) Return on capital employed (%) Gearing (x) Interest coverage (x) Debt/EBITDA (x) Asset turnover (x) Current ratio (x) Gross current assets (days)

Mar-08 -2.7 -9.0 -43.9 11.9 94.1 -0.4 -400.3 -0.7 4.1 0.8 6.0 3.4 1.1 0.6 149

Mar-09 19.7 47.7 648.9 14.7 45.0 1.7 72.9 3.9 8.0 1.5 4.0 4.6 1.0 0.5 178

Mar-10 10.0 -31.7 -490.5 9.1 -16.9 -6.2 0.0 -16.0 0.3 1.8 1.7 7.3 0.8 0.5 121

QUARTERLY RESULTS
Profit and loss account (Rs million) No of Months Revenue EBITDA Interes t Depreci a tion PBT PAT Sep-10 3 8,377.3 2,262.1 465.6 1,477.0 319.5 242.4 100.0 27.0 5.6 17.6 3.8 2.9 % of Rev Sep-09 % of Rev 3 7,929.9 2,089.5 635.8 1,303.1 150.6 104.5 100.0 26.3 8.0 16.4 1.9 1.3 Jun-10 3 8,712.0 2,461.4 434.6 1,433.2 593.6 396.3 100.0 28.3 5.0 16.5 6.8 4.5 % of Rev Sep-10 % of Rev 6 17,089.3 4,723.5 900.2 2,910.2 913.1 638.7 100.0 27.6 5.3 17.0 5.3 3.7 Sep-09 6 16,432.3 4,346.5 1,160.9 2,537.0 648.6 423.9 100.0 26.5 7.1 15.4 3.9 2.6 % of Rev

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Tata Communications Ltd

FOCUS CHARTS & TABLES
Rs mn 12,000 10,000 8,000 6,000 4,000 2,000 0

Quarterly sales & y-o-y growth

Per cent 30 20 10 0 -10 -20 -30

Rs mn 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Dec-07

Quarterly PAT & y-o-y growth

Per cent 800 600 400 200 0 -200

Dec-08

Dec-09

Sep-08

Sep-09

Mar-08

Mar-09

Dec-07

Dec-08

Dec-09

Jun-08

Jun-09

Sep-08

Sep-09

Jun-10

Mar-08

Mar-09

Mar-10

Sep-10

Sales
Rs/share 12 10 8 6 4 2 0

Sales growth y-o-y (RHS)

Net Profit

Net profit growth y-o-y (RHS)

EPS

Per cent 40 35 30 25 20 15 10 5 0

Movement in operating and net margins

Sep-08

Sep-09

Mar-10

Sep-10

Jun-08

Jun-09

Jun-10

Dec-07

Dec-08

Dec-09

Mar-08

Mar-09

Dec-07

Dec-08

Dec-09

Jun-08

Mar-08

Sep-08

Mar-09

Sep-09

Mar-10

Jun-10

Sep-10

OPM

NPM

Shareholding Pattern (Per cent) Dec 2009 Mar 2010 Promoter 76.2 76.2 FII 1.4 0.9 DII 12.0 12.0 Others 10.5 10.9

Jun 2010 76.2 1.0 11.9 11.0

Sep 2010 76.2 1.1 12.5 10.2

Board of Directors Director Name Subodh K. Bha rga va (Mr.) N. Srina th (Mr.) Kis hor Ana nt Cha uka r (Mr.) Arunkuma r Ra ma nla l Ga ndhi (Mr.) Ama l Ga nguli (Mr.) As hok Jhunjhunwa la (Dr.) P.V. Ka l ya na s unda ra m (Mr.) Vinod Ana ndkuma r Kuma r (Mr.) V.R.S. Sa mpa th (Dr.) Ava dhes h Kuma r Sri va s ta va (Mr.) Md.Sha bha z Ali (Mr.) Ra ma dora i Venka tra ma n Subra ma ni a n (Mr.)

Designation Non-Executi ve Cha irma n Ma na gi ng Director Non-Executi ve Di rector Non-Executi ve Di rector Non-Executi ve Di rector Non-Executi ve Di rector Non-Executi ve Di rector Non-Executi ve Di rector Non-Executi ve Di rector Nomi nee Di rector, NonExecuti ve Di rector Nomi nee Di rector-Goi Non-Executi ve Di rector

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Jun-10