Tata Communications reported an 86.2% jump in net profit to ₹341 crore for the September quarter, driven by strong data services revenue and record margins. Despite this growth, the company faces a significant ₹7,844 crore regulatory demand from the Department of Telecommunications. Investors should watch how the company progresses in its legal contest against these demands and the ongoing restructuring of its Kaleyra subsidiary.
Tata Communications posted a strong financial performance for the quarter ended September 30, 2026, marking a significant rise in profitability. The company reported a consolidated net profit of ₹341.03 crore, an 86.2% increase compared to ₹183.06 crore in the same quarter last year. Revenue from operations also rose by 9.6% to reach ₹6,687.89 crore.
The core of this growth was the company's data services segment, which saw revenue climb by 12.2% to ₹5,810.99 crore. Operational efficiency also reached a new high, with the company recording its highest-ever quarterly EBITDA of ₹1,422 crore. This represents a 21.2% increase year-on-year, pushing EBITDA margins to 21.3%, an improvement of 202 basis points. Additionally, the digital services segment showed signs of recovery, with revenue growing 18.6% and losses narrowing as margins improved.
Corporate Restructuring and Leadership
Beyond the financial results, the company announced a strategic shift in its group structure. The board approved the transfer of its entire shareholding in the US-based firm Kaleyra to its wholly-owned subsidiary, Tata Communications (Netherlands) B.V. This transaction involves assets valued at approximately $92.625 million and is designed to simplify the company's hierarchy. In other administrative updates, the company confirmed the appointment of Ridhi Sood as the new Company Secretary and Compliance Officer, effective November 1, 2026.
Regulatory Headwinds
Despite the positive quarterly earnings, the company faces substantial regulatory pressure. Statutory auditors highlighted ongoing disputes with the Department of Telecommunications regarding licensing fees. The company has received demand notices totaling ₹7,844.57 crore covering the fiscal years 2005-06 through 2024-25.
Currently, ₹7,513.71 crore of this amount is classified as a contingent liability, meaning it is a potential future cost that has not yet been confirmed as a definite payment. The company maintains that its licenses are not covered by the 2019 Supreme Court judgment related to Adjusted Gross Revenue (AGR). Tata Communications is actively contesting these demands before both the Supreme Court and the Telecom Disputes Settlement and Appellate Tribunal (TDSAT).
For investors, the key monitoring areas will be the developments in these legal proceedings, which could impact the company's long-term financial liabilities. Additionally, tracking the execution and integration success of the restructured Kaleyra unit will be important for assessing the company's operational focus.