Tech Mahindra expects a year-on-year improvement in its telecom business, despite recent challenges, Mohit Joshi, Chief Executive Officer and Managing Director of Tech Mahindra said in a post-earnings conference call. For FY24, the company reported a 12.4 percent decline in its telecom sector revenue, with a steeper drop of 16.5 percent in Q4 FY24, Joshi said. However, there's a silver lining on the horizon with Q1 FY25 figures showing that the declines have now reduced to single digits.
"I expect to see some level of year-on-year improvement in the telecom business over time. I believe that our sort of position in telecom from a comparative position remains very strong," Joshi said.
Joshi said that despite the ongoing challenges and visible spending pressures within the telecom sector, Tech Mahindra, as a major industry player, stands to gain as the sector recovers. While he doesn't expect immediate improvements, he believes that, given the sector's size, a positive trend will emerge over time.
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The communication vertical's performance fell nearly 2 percent QoQ and nearly 10 percent on an annual basis, according to the press release shared by Tech Mahindra. Communications, Media, and Entertainment (CME) accounts for nearly 40 percent of the company's revenue which includes telecom as well.
Telecommunication is a key differentiator for Tech Mahindra which serves seven of the top ten operators. "If I look at the priority that operators have, these are broadly in three areas," Joshi said and went on to highlight cost management, revenue generation, and AI integration as the three areas.
"Whether it's a vendor consolidation or it is autonomous operations and autonomous networks, we are active in that space," Joshi said regarding the cost side. "The second is revenue generation, both on the B2B and B2C side, and the wholesale network side."
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"And finally, working with our clients to help them become AI-native telcos," Joshi added.
Tech Mahindra reported its Q1 FY25 earnings on July 25 wherein the company's consolidated net profit rose nearly 29 percent QoQ to Rs 851 crore, on low base effect. Revenue from operations rose 1 percent to Rs 13,005 crore. Both net profit and revenue came in slightly below Moneycontrol's estimates of Rs 861 crore and Rs 12,968 crore.
Meanwhile, the company's EBIT margin expanded by 110 basis points to 8.5 percent on a QoQ basis, surpassing Moneycontrol's estimate of 8 percent. The company attributed the increase in EBIT margin to cost-saving measures under Project Fortius and operational efficiencies.
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