Tata Teleservices (Maharashtra) (532371) Q4 19/20 earnings summary

Executive summary

• FY20 reflected the transition to an enterprise-focused telecom business after the Consumer Mobile Business demerger to Bharti Airtel became effective July 1, 2019.

• Revenue and EBITDA declined year over year; a large exceptional provision for License Fee and Spectrum Usage Charges drove the net loss to Rs. 3,714 crore.

• Negative equity, substantial debt and unresolved AGR obligations leave financial flexibility dependent on promoter support and refinancing access.

Financial highlights

• Total revenue was Rs. 1,088 crore versus Rs. 1,322 crore in FY19, an ~18% decline; service revenue was Rs. 1,053 crore versus Rs. 1,246 crore, with periods not comparable after the demerger.

• EBITDA fell to Rs. 432 crore from Rs. 702 crore; EBITDA margin was 40%.

• Loss before exceptional items widened to Rs. 1,284 crore from Rs. 999 crore; net loss was Rs. 3,714 crore versus Rs. 668 crore.

• Exceptional items were a net loss of Rs. 2,430 crore, primarily reflecting additional LF/SUC provisions; the FY20 provision included Rs. 2,467 crore for LF/SUC.

• Finance cost was Rs. 1,545 crore; basic and diluted loss per share were both Rs. 19.00 versus Rs. 3.41 in FY19.

Outlook and guidance

• Enterprise telecom is expected to grow, supported by fiber reach, customer relationships, customized solutions, managed services and channel partners.

• Sustaining growth without significant incremental network investment may be difficult amid changing technology, competition and COVID-19 disruption.

• Strategic restructuring of residual business lines or assets may be explored; stated expectations and risks may not materialize.