Tata Communications Ltd has begun deployment of the first set of artificial intelligence (AI) chips from Nvidia within the company, managing director (MD) and chief executive officer (CEO) A.S. Lakshminarayanan said in an exclusive interaction, as the digital infrastructure provider invests in building AI capabilities internally.
He added that select customers will be among the first to get the chips while availability will be increased by the end of the year.
“We’ve already received some chips, which we are in the process of installing, and implementing,” Lakshminarayanan said in the interaction that followed the company’s first quarter results last week. “As we’ve said, we’re investing internally in AI, so there are a lot of internal use cases for which we’ll be using it, and for some select customers we’ll make it available. But the larger general availability will be more towards the end of the year.”
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Nvidia and Tata Communications are developing an AI cloud in India aimed at providing critical infrastructure. The partnership includes delivering AI computing infrastructure and platforms for developing AI solutions, which will be used by enterprises, such as Tata Consultancy Services Ltd (TCS).
Tata Communications reported a ₹333 crore profit for the quarter ended 30 June, down 13% compared to the same quarter the year before, even as revenue rose over 18% on year to ₹5,633 crore.
Earnings before interest, tax, depreciation and amortization (Ebitda) was at ₹1,124 crore, up 9.8% from ₹1,024 crore in the same quarter last year. The Ebitda margin, however, fell by 150 basis points to 20% versus 21.5% in Q1 of FY24.
A basis point is one-hundredth of a percentage point.
The fall in profit was attributed to the drag effect of the acquisitions of The Switch and Kaleyra, and its other subsidiaries that were not making money. But the top executive said that the fall in Ebitda margin was in line with its ongoing plans and strategy of investing for future growth.
During the quarter ended March 2024, the company had said that one of its subsidiaries had issued a termination notice to a customer—alluding to Vodafone Idea Ltd without naming it—and was in discussions on disengagement transition plan. Further, dues are pending for which discussions are going on.
“Our relationships were good last quarter, so we anticipate the payments due to us will come to us. We’re in the early stages of our process of contract, termination and separation,” Lakshminarayanan said.
He added that the bulk of the teams were focused on organic growth, on the back of recent acquisitions of The Switch and Kaleyra. The acquisitions merged with the business in the US are expected to turn profitable in two years.
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Lakshminarayanan said there was a need for correct pricing for leasing spectrum from telecom companies for private 5G.
“5G is taking time because it is expensive. The government, while it has announced a plan to support enterprises, it’s still not gone the full length to support the enterprises with the private network. We have been also advocating and recommending that the government supports private networks for enterprises in a different manner, because the other operator’s focus will be on the B2C (business-to-consumer) market,” he added. Further, the 5G ecosystem of devices for factories must pick up and the return on investment by enterprises must be ascertained before contracts begin to flow.
The executive added that the Indian market was more bullish than the global market where pressures due to macroeconomic conditions and conflict in Europe were creating headwinds.