Slowdown, Tata Comm to focus on cost reduction

Tata Communications will focus on cost reduction and cost rebalancing across the portfolio due to uncertain global economic outlook, according to a top official of the company. 

"... given the uncertainties in the near term global economic outlook, we will focus on cost reduction and cost rebalancing across the portfolio," Tata Communications Managing Director and group Chief Executive Vinod Kumar said in an interview to Tata groupwebsite. 
He said the company is "at an inflection point" in its journey, moving into the area of offering solutions and transformational capabilities to its customers. 

"This will require us to rewire our thinking on how to approach the market, to double down in some technology and product areas," Kumar said. 

Tata Communications has recently cut down 300 jobs across global operations as part of its review to align business with current business need. 

On a query about challenges the company faces due to a changing telecom landscape, Kumar said having a business portfolio has its benefits, but it is a challenging task to create that portfolio and ensure that all parts of the portfolio get adequate attention. 

"With associated issues such as surplus land and government equities, our hands are tied to some extent on how we can financially structure the company for optimal results. That is a challenge and, hopefully, it will get resolved in the coming quarter," he added. 

Asked about the growth strategy for the company's three businesses: voice, data and mobility services, and enterprise solutions, Kumar said voice will continue to be a high-volume business for the company while there is huge opportunity for growth in providing data services. 

"The fastest growth will be in the enterprise business. This will occur through a combination of offering services to enterprises to transform their businesses using the power of networks and IT, and building industry-specific applications in areas such as banking, media, entertainment and healthcare," he said. 

On its investments in South Africa (Neotel) and Sri Lanka (Tata Communications Lanka), Kumar said the company's strategy is to create secondary or shadow home markets in emerging markets to serve as anchors for its global and cross-border connectivity business. 

"In 2011-12 it (Neotel) posted a 25 per cent year-on-year growth in revenues and turned profitable at the operating level," he added.