Tata Communications Ltd Management Discussions

Economic Review Global Economy1 2

During 2026, the global economy remained steady though uneven, with growth stabilising at ~3.1%. This stability has been driven largely by sustained demand in services and continued investments in digital infrastructure, particularly artificial intelligence (AI), cloud computing, and high-performance networks. While advanced economies experienced relatively slower growth due to tighter monetary conditions and elevated interest rates, emerging markets continued to be the primary engines of global expansion, supported by domestic demand and technology-led trade.

At the same time, underlying risks continue to shape the global landscape. Heightened geopolitical tensions, particularly in West Asia and other strategic regions, have disrupted energy markets and global trade routes. Protectionist policies and evolving tariff regimes have added uncertainty to global supply chains, while rising public debt and increasing defence spending have contributed to fiscal pressures and inflation volatility. These developments have reinforced the need for resilient, diversified, and secure global infrastructure systems.

Global GDP Growth (%)

Outlook Global Economy

The global outlook remains stable but cautious. Growth is expected to remain in the range of 3.1%-3.3% over the near term, supported by moderating inflation and potential monetary easing in major economies. However, risks from geopolitical tensions, commodity price volatility, and trade fragmentation continue to pose downside challenges. As a result, enterprises globally are increasingly prioritising cost optimisation, resilience, and accelerated digital transformation to navigate uncertainty.

The Indian Economy3 4

India continued to demonstrate strong economic momentum in FY 25-26, with GDP growth estimated at 7.4%, positioning it among the fastest-growing major economies globally. Growth has been broad-based, led by the services sector, which continues to anchor economic expansion, alongside resilient domestic consumption and sustained public investment in infrastructure.

Indias structural strengths are further reinforced by its rapidly expanding digital ecosystem. Widespread internet adoption, accelerated 5G rollout, and the scaling of Digital Public Infrastructure such as UPI and DigiLocker are transforming the economy into a digitally integrated, services-led system. Government policy continues to support this shift through regulatory reforms, targeted fiscal measures, and incentives for digital infrastructure, cloud, and data centre investments.

While the outlook remains favourable, India continues to face external risks from global trade uncertainties, commodity price volatility, and capital flow fluctuations. Nonetheless, strong macroeconomic fundamentals and policy support provide resilience against these global headwinds.

Fiscal Policy and Budgetary Measures

Indias fiscal strategy continues to balance growth with consolidation, with a strong emphasis on infrastructure-led development and digital transformation. The Union Budget reinforces this approach through sustained capital expenditure, increased allocations for digital infrastructure, artificial intelligence, and semiconductor ecosystems, and policy incentives for data centres and cloud investments.

Additionally, continued expansion of digital public infrastructure and broadband connectivity is enabling greater digital inclusion and enterprise adoption, strengthening Indias position as a global technology and services hub.

Key Macroeconomic Developments

Global macroeconomic conditions continue to be shaped by geopolitical developments and shifting trade dynamics, particularly tensions in West Asia. The escalation of the Iran conflict in early 2026 has intensified disruptions to key shipping routes, impacting energy supply chains, fuel costs, and logistics expenses. These developments have contributed to oil price volatility and exposed vulnerabilities in globally interconnected trade systems, while evolving trade policies and tariff measures have further added uncertainty to cross-border trade and supply chain configurations.

This challenging environment, marked by heightened geopolitical risks and capital flow volatility, has led to periodic energy price spikes and rising freight costs, compressing margins across industries. For India, sustained disruptions could affect inflation, the current account, and overall economic activity. In this context,

telecom and subsea cable operators face increased operational risks in strategically important maritime regions, underscoring the importance of resilient and diversified network infrastructure.

These factors are driving structural shifts in how enterprises design supply chains, manage risk, and invest in infrastructure, with a growing emphasis on redundancy, diversification, and digital integration.

Industry Overview

The Information and Communications Technology (ICT) sector continues to undergo a structural transformation, driven by the convergence of connectivity, cloud, and data infrastructure. Telecom operators are increasingly evolving from traditional connectivity providers to integrated digital solutions partners, offering cloud, cybersecurity, IoT, and platform-based services.

AI is at the centre of this transformation, driving new use cases across enterprise operations, network management, and customer experience. Enterprises are moving beyond pilot programmes to large-scale deployments, leading to significant investments in data centres, high-performance computing, and AI-enabled infrastructure.

This shift is accompanied by the increasing adoption of hybrid and multi-cloud environments, the rise of edge computing, and the growing importance of secure, low-latency connectivity. As digital ecosystems expand, cybersecurity has emerged as a critical priority, with organisations investing in advanced protection, monitoring, and compliance capabilities.

Global IT Spending Trends5

Global IT spending continues to grow at a strong pace, with total spending expected to exceed $6 trillion in 2026, driven largely by investments in AI, cloud infrastructure, and enterprise digital transformation. Data centre and infrastructure segments are witnessing the fastest growth, reflecting the rising demand for compute, storage, and high-speed connectivity required to support AI workloads and data-intensive applications.

Key Industry Trends Emergence of AI-Native Networks

AI is rapidly scaling from experimentation to enterprise-wide deployment, transforming operations, service delivery, and productivity. The ICT ecosystem is evolving towards AI-native architectures, embedding intelligence into networks to enable real-time optimisation, predictive maintenance, and autonomous operations. This shift is also driving demand for high-performance computing infrastructure while raising considerations around data security, cryptography, and rising infrastructure costs.

Acceleration in Data Consumption and Network Demand

The rapid growth of digital services, video consumption, and enterprise applications is significantly increasing global data traffic, supported by widespread 5G adoption and device connectivity. In India, data usage has already reached high levels, reflecting deep digital penetration. This surge is accelerating investments in fiber networks, spectrum, and edge infrastructure to ensure scalable and cost-efficient capacity expansion.

Shift Towards Platform-Based and API-Driven Ecosystems

The ICT industry is transitioning from traditional connectivity models to platform-driven ecosystems. Telecom operators are leveraging network APIs to enable advanced capabilities such as network slicing, location intelligence, and quality-of-service integration. This shift is unlocking new monetisation opportunities across industries by embedding connectivity into digital services and enterprise workflows.

Cloud, Edge and Distributed Computing Convergence

Enterprises are increasingly adopting hybrid and multi-cloud strategies, driven by AI adoption, data sovereignty requirements, and cost optimisation needs. The convergence of cloud, edge, and next-generation networks is enabling low-latency, distributed computing and more seamless digital experiences. This evolution is reshaping infrastructure design and accelerating demand for integrated connectivity solutions.

Enterprise Digitalisation

Digital transformation continues to accelerate across industries, with enterprises adopting cloud, IoT, AI, and platform technologies to enhance efficiency and customer experience. In India, rapid digital adoption and expanding connectivity infrastructure are reinforcing the role of ICT providers as end-to-end transformation partners. This trend is driving sustained demand for integrated digital and network solutions.

Cybersecurity as a Strategic Imperative

As digital ecosystems expand, cybersecurity has become a critical board-level priority. The growing adoption of cloud and AI is increasing the complexity of the threat landscape, elevating financial and reputational risks. Consequently, organisations are investing in advanced security capabilities, real-time monitoring, and AI-driven threat detection to strengthen resilience.

Regulatory Evolution

Regulatory frameworks are evolving rapidly in response to data privacy, national security, and digital sovereignty concerns. There is an increasing focus on data localisation, secure infrastructure, and governance of emerging technologies such as AI. At the same time, the expansion of digital public infrastructure is driving greater compliance requirements and the need for secure, scalable digital ecosystems.

Policy developments in India promoting growth in the ICT Industry6

Indias policy and regulatory framework continues to be a key driver of growth in the ICT sector. The Government of Indias approach is centred on expanding digital infrastructure, strengthening regulatory clarity, promoting indigenous innovation, and enabling technology-led economic transformation. These initiatives collectively aim to enhance connectivity, deepen digital inclusion, and build a secure and globally competitive telecommunications ecosystem.

A significant reform in this direction is the Telecommunications Act, 2023, which replaces legacy legislations with a modern, technology-neutral framework aligned with the needs of a digital economy. The Telecommunications Act, 2023, introduces a simplified authorisation regime, enables more efficient spectrum management, and supports innovation through regulatory sandboxes for emerging technologies such as 5G, IoT, and enterprise applications. It also adopts a digital-first approach to approvals and compliance, while strengthening consumer protection, data privacy, and cybersecurity through structured rules and oversight mechanisms. This is improving regulatory predictability and ease of doing business for telecom and ICT players.

India has simultaneously achieved rapid progress in digital infrastructure. The country has witnessed one of the fastest 5G rollouts globally, significantly enhancing network capacity and enabling new use cases across enterprise connectivity, cloud services, and IoT. Broadband expansion under the National Broadband Mission 2.0, along with increased fiber connectivity to rural areas, is strengthening last-mile access and supporting more inclusive digital growth.

Infrastructure deployment has further improved with reforms in Right of Way (RoW) regulations, which have streamlined approvals, reduced timelines, and enabled faster rollout of telecom infrastructure. In parallel, Indias Digital Public Infrastructure ecosystem-anchored by platforms such as UPI, DigiLocker, and UMANG-is creating a robust and interoperable digital backbone that is transforming service delivery and driving adoption of digital services across sectors.

The Government has also prioritised cybersecurity and digital trust through targeted initiatives, including enhanced telecom security frameworks and digital intelligence platforms, which are strengthening resilience and improving fraud detection. Consumer-facing initiatives such as the Sanchar Saathi platform are further improving transparency and user control within the telecom ecosystem.

In addition, a strong focus on indigenous technology development under the Atmanirbhar Bharat initiative is fostering domestic capabilities in telecom and digital technologies. Progress in areas such as indigenous 4G/5G stacks, the Bharat 6G Mission, and the Production Linked Incentive (PLI) scheme is boosting domestic manufacturing, increasing exports, and reducing dependence on imports.

Overall, Indias policy environment is creating a robust foundation for sustained ICT sector growth by integrating regulatory reform, infrastructure development, digital innovation, and manufacturing capabilities. This is reinforcing Indias position as a leading global hub for digital services, connectivity, and technology-led growth.

Union Budget 2026-27: Key Tech Announcements7 8

The Union Budget 2026-27 reinforces Indias ambition to become a global digital and technology hub through continued infrastructure investments, increased allocations for AI, semiconductors, and digital platforms, and policy support for data centres and cloud ecosystems. These measures are expected to attract hyperscaler investments, expand data centre capacity, and increase demand for high-capacity network infrastructure.

Infrastructure Expansion

The continued emphasis on infrastructure-led growth, supported by increased capital expenditure, is strengthening physical and digital connectivity across the country. Investments in logistics, transport corridors, and urban development are improving the seamless movement of goods, services, and data, while also driving enterprise demand for reliable communication networks and integrated digital infrastructure.

Key Allocations9

Higher allocations towards digital initiatives, including AI, cybersecurity, and digital governance, are reinforcing the foundation of Indias technology ecosystem. Increased investments in semiconductors and electronics are further strengthening the broader digital value chain, supporting long-term demand for data, connectivity, and enterprise digital services.

Strengthening the IT and Digital Services Ecosystem10

The simplification of the IT services framework and enhanced tax clarity through uniform safe harbour provisions are improving ease of doing business for technology companies. These measures are expected to boost Indias attractiveness as a global delivery hub and support the continued growth of cross-border digital services and enterprise networks.

Positioning India as a Global Cloud and AI Infrastructure Hub

Targeted incentives for data centres and cloud providers are increasing Indias attractiveness for hyperscaler investments. This is expected to drive significant expansion in data centre capacity and cross-border data flows, leading to higher demand for high-speed, low-latency connectivity and integrated digital infrastructure solutions.

Push for Semiconductor, Electronics and Strategic Technologies

Increased focus on semiconductor manufacturing, electronics production, and strategic technology ecosystems is strengthening domestic capabilities and supply chain resilience. This growth is expected to accelerate adoption of enterprise connectivity, IoT, and digital infrastructure solutions across industries.

Innovation, Research and Advanced Technologies

Sustained investments in research, emerging technologies, and digital skill development are enhancing Indias innovation ecosystem. These initiatives are expected to support longterm enterprise digital transformation and drive demand for advanced technology platforms and infrastructure services.

Artificial Intelligence and Digital Platforms Adoption

Government-led initiatives to promote AI adoption across sectors are accelerating the integration of digital platforms into enterprise and governance systems. This is expected to increase demand for cloud services, data processing capabilities, and high-capacity networks to support AI-driven workloads.

Trade Facilitation and Digital Commerce Enablement

Digitalisation of trade processes, including streamlined customs systems and logistics platforms, is improving efficiency in cross-border trade. This is enabling faster movement of goods and data, while creating opportunities for digital connectivity, data exchange, and managed network services across global supply chains.

Sustainability in Telecom

The ICT sector plays a critical role in enabling sustainable growth and helping businesses achieve their Net Zero ambitions. ICT platforms and hyperconnected ecosystems can play a transformative role in addressing global challenges and building a more sustainable future.

Addressing the Climate Crisis: Technologies such as 5G, AI,

and IoT are reshaping business operations by accelerating decarbonisation efforts and supporting the global ambition of limiting warming to 1.5?C above pre-industrial levels. Hyperconnected systems further improve energy efficiency and enable greater adoption of renewable energy through real-time optimisation, helping reduce carbon emissions while improving cost efficiency.

Strengthening Social Accountability: Continuous learning and effective skill development help employees and communities adapt to an increasingly hyperconnected ecosystem without widening inequalities arising from evolving digital workflows. This also deepens organisational social responsibility by strengthening cultural intelligence and reinforcing the connection between business and society.

Enabling New and Innovative Business Models:

Hyperconnected ecosystems helps organisations build better products, enhance customer and supplier experiences, and improve transparency throughout the value chain. This creates sustainable competitive advantages by fostering rich, interconnected business communities.

Outlook for Tata Communications

The operating environment for Tata Communications is being shaped by the convergence of global economic shifts, Indias strong growth trajectory, and rapid digital transformation across enterprises. While geopolitical tensions, supply chain realignments, and trade uncertainties continue to introduce volatility in the global operating landscape, they are simultaneously reinforcing the need for resilient, secure, and diversified digital infrastructure and network capabilities.

In parallel, Indias policy-driven focus on digital infrastructure expansion, cloud and AI enablement, and positioning itself as a global technology and data hub is creating a structurally strong demand environment. The rapid scale-up of digital public infrastructure, growth in hyperscaler investments, and expansion of data centres are significantly increasing the need for high-capacity, low-latency networks and seamless crossborder connectivity.

These trends are driving sustained demand for integrated digital solutions spanning connectivity, cloud, cybersecurity, and managed services. The increasing adoption of AI, platform- based business models, and hybrid cloud architectures is further accelerating enterprise reliance on scalable, secure, and globally interconnected digital ecosystems.

In this context, Tata Communications is strategically positioned to capitalise on these opportunities through its global network footprint, digital platforms, and enterprise-focused portfolio. The Companys capabilities in enabling global connectivity, supporting cross-border data flows, and delivering integrated digital solutions align closely with the evolving needs of enterprises in a digital-first, interconnected world. As organisations continue to prioritise resilience, efficiency, and innovation, Tata Communications is well placed to play a critical role in enabling this transformation while driving sustainable and long-term growth.

Overall, Tata Communications global network footprint, digital platforms, and enterprise-focused capabilities position it strongly to navigate global uncertainties while capitalising on India-led growth and the accelerating digitalisation of enterprises worldwide.

Organisation Overview

Tata Communications is a communications technology player operating in over 190 countries and territories, supporting enterprise digital transformation through collaboration solutions, core and next-gen connectivity, cloud, cybersecurity, and media services. The Company serves ~300 of the Fortune 500 firms and connects businesses to 80% of the worlds cloud providers.

With a solutions-driven approach, robust managed services, and advanced infrastructure, its digital fabric delivers intelligent capabilities across cloud, IoT, cybersecurity, and network services. Over more than 30 years, the Company has played a pivotal role in accelerating digital adoption and enabling enterprises to thrive in hyperconnected ecosystems through secure and connected digital experiences.

Our Culture

At Tata Communications, culture remains the cornerstone of our success. Our values have been refined to align with our organisational strategy, focusing on six key tenets:

1. Ownership and Accountability

2. Collaboration

3. Can-do Attitude and Growth Mindset

4. Being Agile

5. Continuous Learning and Skills Transformation

6. Innovation and Problem Solving

We foster digital dexterity by equipping employees with the skills and mindset needed to thrive in a rapidly evolving digital landscape, with upskilling closely aligned to business priorities. Employees are encouraged to explore, learn, and create exceptional digital experiences, supported by an innovation framework that helps bring new ideas to life.

To strengthen inclusive leadership, we have introduced an immersive learning journey for people managers, equipping them to lead diverse teams effectively. The initiative includes webinars led by global diversity, equity and inclusion experts, alongside customised e-learning modules featuring assignments, case studies, and interactive social discussions.

Culture

We are committed to fostering a culture rooted in collaboration, ownership, accountability, agility, continuous learning, skills transformation, innovation, problem solving and a strong growth mindset.

These strategic themes guide both our short and long-term priorities, ensuring we:

• Collaborate closely with customers to co-create complex, seamless solutions that leverage our collective strengths and deliver tangible value.

• Invest in technological innovation to strengthen our offerings, optimise assets, drive demand, and expand market presence.

For our strategy to succeed, these shifts must work in harmony. We are proud of the progress achieved so far and remain focussed on accelerating these priorities to drive sustained growth.

Customer Segmentation

Tata Communications serves the following major customer segments:

1. Enterprise and Over-the-Top (OTT) Players

2. Service Providers

Each segment is supported through a clearly defined route-to- market (RTM) strategy tailored to its specific needs.

Enterprise and Over-the-Top OTT Players

In the post-pandemic era, digital transformation continues to reshape businesses, accelerating the adoption of hybrid work and e-commerce. Enterprises are leveraging digitalisation to drive growth, innovation, customer experience, productivity, agility, and risk management.

These shifts are enabling the delivery of differentiated platforms, solutions, and services focused on workforce collaboration, enterprise mobility, and omnichannel engagement, supported by a refined, sector-focused strategy.

Hyperscale cloud providers and OTT players represent a rapidly expanding enterprise segment, accounting for the majority of global IP traffic. Tata Communications supports their growth through robust connectivity solutions, including:

• Point-to-point network connectivity within India and globally

• Subsea cable capacity for intercontinental data transfer

• Inter-city and intra-city connectivity across data centres

Our solutions enable OTT players to address explosive global data consumption with reliability, resilience and scalability.

Service Providers

The service provider segment is being propelled by surging global data consumption, largely driven by end consumers.

To support this segment, Tata Communications offers an integrated portfolio comprising:

• Wholesale voice solutions

• Domestic and international data connectivity, including internet backbone (IP transit)

• Value-added roaming services for mobile operators

• Carrier-specific business process outsourcing services

Our trusted platforms enable service providers to remain agile, competitive and relevant in a rapidly evolving market landscape.

Business Excellence

At Tata Communications, business excellence is central to continuously strengthening management systems and processes to deliver superior stakeholder value. Guided by the Tata Business Excellence Model (TBEM) and led by the Tata Business Excellence Group (TBExG), the approach drives structured, ongoing improvement across leadership, strategy, customer engagement, knowledge management, workforce, operations, and business outcomes. Rigorous TBEM assessments drive process maturity, disciplined execution, and consistent performance improvement.

Our continued focus on TBEM has strengthened key business processes and enabled us to deliver consistent outcomes:

• Customer experience leadership, with Customer NPS consistently positioned in the top quartile against global benchmarks for over five years, reflecting enduring customer trust and strong relationship management

• Enhanced buying experience, driven by seamless, customer-centric sales and onboarding processes

• Improved operational agility, enabled by streamlined governance and more efficient vendor onboarding.

Data Maturity

Tata Communications has adopted DATOM, a structured data maturity framework, to systematically strengthen enterprise data management across data, technology, process, and people. The framework supports continuous improvements in data quality, data literacy, data governance, and data flow automations, enabling faster deployments and responsible adoption of GenAI use cases resulting into measurable transformation business outcomes.

Through DATOM assessments, capabilities across metadata, data quality, lineage, governance, and ownership are strengthened, shifting from a reactive approach to a proactive approach of making data AI ready by design.

Our 1-3-30 framework accelerates the scaling of new offerings by embedding early customer feedback, clear accountability, and transparent metrics—enabling rapid product-market alignment and data-driven decision-making.

Financial Performance

We remain committed to strengthening products and services that support customers in their digital transformation journeys while reinforcing our balance sheet.

Our Financial Fitness strategy focuses on delivering profitable revenue growth, generating strong cash flows, and optimising working capital efficiency.

Our approach to sustainable and profitable growth is anchored in a finance strategy built on the twin pillars of ‘Fit to Compete and ‘Fit to Grow. These pillars guide our efforts to enhance market capitalisation and maximise shareholder value, while maintaining strong profitability and financial discipline to pursue both organic and inorganic growth opportunities and reinforce market leadership.

Financial Performance (Standalone)

Particulars	FY 25-26	FY 24-25	YoY growth (%)	Reasons for deviation more than 25%
Net Revenue (I in crore)	7,375.71	7,277.86	1.34	-
EBITDA (I in crore)	1,748.07	1,596.23	9.51	-
PAT (I in crore)	793.87	1,050.87	(24.46)	-
Net Profit Margin (in %)	10.76	14.44	(25.48)	The change is primarily attributable to the following factors: gain on sale of an asset classified as ‘held for sale, loss on sale of investment in a subsidiary during previous year, interest on tax related to license fees, staff cost optimisation and impact of new Labour Codes during the year. For further details, please refer to Note 33 of the Standalone Financial Statements.
Return on Net Worth (in %)	7.55	10.33	(26.91)
Operating Profit Margin (in %)	9.54	8.41	13.44	-
Debt Equity Ratio (in times)	0.45	0.31	45.16	Increased mainly due to borrowings availed during the year.
Interest Coverage Ratio (in times)	5.19	6.78	(23.45)	-
Current Ratio (in times)	0.57	0.54	5.56	-
Debtors Turnover (in times)	5.77	6.02	(4.15)	-

Tata Communications delivered a steady financial performance in FY 25-26, with revenue on consolidated basis rising by 7.3% YoY to H24,803 crore, supported by continued momentum in data services, which grew 9.4% on YoY basis to Rs.21,352 crore. Growth was driven by the Companys digital portfolio, which expanded 16.7% YoY, alongside strong traction in next- generation connectivity solutions. Profitability metrics reflected a balanced growth trajectory with continued investments in the digital portfolio. The EBITDA for FY 25-26 increased 5.5% YoY to

H4,822 crore, with margins at 19.4%, marginally lower due to changes in revenue mix towards higher-growth digital services.

While reported PAT for the year declined due to exceptional gains in the prior year, adjusted PAT grew 8.1% on YoY basis, indicating underlying earnings resilience. The Company also demonstrated strong cash flow generation, supported by improved working capital management. Overall, the financial performance underscores Tata Communications transition towards profitable growth, supported by digital scale-up and disciplined capital allocation.

Human Resources

The People section of the Integrated Annual Report highlights the diverse capabilities, competencies, and experiences of our workforce, alongside our ongoing efforts to deliver a holistic employee experience and foster a vibrant, high- performing culture.

Risk Management

As a global organisation operating across multiple industry segments, Tata Communications functions within a complex and highly competitive landscape, exposing us to a broad spectrum of internal and external risks. We proactively implement comprehensive measures through a holistic risk management framework that enables us to identify, assess and address any material impacts on our operations. By evaluating a wide range of scenarios, we are able to make informed decisions that support and sustain our global market leadership.

Internal control systems and their adequacy

We maintain strong internal control mechanisms, with clearly defined financial authority delegated across appropriate management levels through our Delegation of Powers policies and procedures. Our technical and financial operations are supported by advanced technology and systems, ensuring rigorous oversight and operational integrity.

Enterprise Risk Management (‘ERM)

Risk assessments form an integral part of our annual internal audit programme, covering all businesses and functions. Comprehensive reviews and testing of financial controls provide assurance to the Management, the Risk Management Committee, Audit Committee, and the Board of Directors regarding their effectiveness.

The Board has established a comprehensive ERM framework to enable early risk identification and proactive management. The Risk Management Committee oversees key risks impacting performance and strategy, with assessments spanning strategic, financial, operational, market, legal and regulatory, technology, and ESG dimensions. Targeted mitigation measures are implemented, while emerging developments are also monitored to identify both risks and opportunities.

The Global Management Committee (GMC), comprising the CEO, CFO and key business and operations leaders, is responsible for the effective implementation and continuous enhancement of our risk management framework. Tata Communications risk management processes are subject to ongoing improvement, ensuring agility and resilience in a dynamic business environment.

We follow established risk management policies and procedures across all business units, guided by industry best practices and governance principles. This proactive approach helps mitigate risks from internal and external changes while supporting corporate objectives and long-term stakeholder value.

An overview of key risks and mitigation strategies is provided in the Risk Management section of this Integrated Annual Report.

Ongoing legal cases with risk implications

1. Disputed Tax Matters

In past fiscal years, Tata Communications made certain tax holiday and expense claims based on its understanding of the tax laws, as reinforced by legal precedent and advice received from external tax counsel. In some cases, the Indian tax authorities have not accepted these claims and in a few instances, have sought to levy penalties against the Company. The disallowances and penalties have been challenged by the Company under the applicable legal appeals processes, which are at various stages of adjudication. Though no such appeal has been finally decided against us, in the unlikely event of all of the disputes culminating in judgments against us, this could have adverse financial implications on our business.

2. License Fee Matters

i. In 2005, the Company had approached the Telecom Disputes Settlement and Appellate Tribunal (‘TDSAT) to challenge the definition of ‘gross revenue and ‘adjusted gross revenue (‘AGR) as interpreted by the Department of Telecommunications (‘DoT) for the purpose of levying license fees. Some other telecom operators, mostly UAS Licensees, had also separately approached TDSAT for the same relief. TDSAT, vide a common judgment dated August 30, 2007, decided the petition, which was broadly in line with the Companys arguments. However, not being satisfied on two issues viz., (i) date of applicability of the TDSAT order and (ii) disallowance by the TDSAT on deduction of certain charges passed on to other service providers, the Company had challenged TDSATs order before the Honble Supreme Court of India. Concurrently, DoT also filed an appeal against TDSATs order. Based on submissions made by the Company, the appeals filed by the Company and the DoT were de-tagged from the other wider batch appeals. While the Companys appeal and DoTs cross-appeal remained pending, the Honble Supreme Court passed its judgment on October 11, 2011, setting aside the TDSAT order dated August 30, 2007, and permitted telecom operators to approach the TDSAT for challenging the demands. This round before TDSAT culminated in the judgment dated April 23, 2015. Once again, appeals and cross-appeals were filed by the parties. The Company was not a party to these proceedings as its earlier appeals were still pending before the Honble Supreme Court for adjudication. During these proceedings, which were in challenge to TDSAT judgment dated April 23, 2015, the Companys pending appeal and DoTs crossappeal against TDSATs judgment of August 30, 2007 were again de-tagged from the other appeals. While the Companys appeal and DoTs cross-appeal were directed to be heard separately, the Supreme Court heard the appeals filed by other Telecom Operators and DoT, against the TDSAT judgment dated April 23,

2015, and pronounced its judgement on October 24, 2019. The Company believes that this judgment of the Supreme Court is not applicable to the appeals and licenses of the Company. In August / September 2019, the Company received Show Cause cum Demand Notices from DoT regarding license fees for financial years 2006-07 up to 2017-18, for which the Company had submitted its responses. Subsequently, in October 2022, the Company received revised Show Cause cum Demand notices from DoT towards License Fee on its AGR for financial years 2006-07 till 2017-18 in respect of its ILD, NLD and ISP-IT licenses. The Company had duly responded in detail to these Show Cause cum Demand Notices highlighting the apparent errors in the computation of license fee dues and provided detailed submissions against the items of revenue basis which demands were raised. Detailed justification had been provided as to why the Supreme Court AGR judgement dated October 24, 2019 is not applicable and also for exemption for levy of license fees on non-telecom / unlicensed revenue.

Subsequently, acting on the Companys various representations, DoT issued fresh Show Cause cum Demand Notices between June and July 2023. The Company made representations against the revised Show Cause Cum Demand notices. Thereafter, DoT issued Demand Notices from time to time on various dates between July and January 2025 as detailed below:

(a) Vide its demand letter dated July 20, 2023, DoT called upon the Company to pay an amount of H875.80 crore, in respect of financial years 2005-06 (ILD), 2006-07 and 2009-10 (NLD) and 2010-11 (ISP) stating that demands for these financial years have been finalised in terms of Supreme Courts 2019 AGR judgment dated October 24, 2019. The Company challenged the said demand in a petition, before TDSAT wherein, after a detailed hearing, the TDSAT d irected the DoT not to take any coercive actions against the Company till the final disposal of the petition. The matter is currently pending adjudication.

(b) Vide its demand letter dated August 8, 2023, DoT called upon the Company to pay an amount of H992 crore, towards license fee in respect of financial years 2006-07 (ILD and ISP) and 2007-08 (NLD, ILD and ISP). The Company challenged the said demand in a petition, before TDSAT wherein, after a detailed hearing, the TDSAT d irected the DoT not to take any coercive actions against the Company till the final disposal of the petition. The matter is currently pending adjudication.

(c) Vide its demand letter dated August 11, 2023, DoT called upon the Company to pay an amount

of H51 crore, in respect of the IP-II & TCISL- ISP licenses. The Company challenged the said demand in a petition, before TDSAT wherein, after a detailed hearing, the TDSAT directed the DoT not to take any coercive actions against the Company till the final disposal of the petition. The matter is currently pending adjudication.

(d) Vide its demand letter dated August 17, 2023, DoT raised certain license fee demands of H6,159 crore (of which, enforceable demand is of H3,785 crore, and H2,374 crore is realisable based on outcome of DoTs appeal pending before the Honble Supreme Court of India) pertaining to NLD, ILD, ISP-IT and UL-ISP licenses of the Company for financial years from 2008-2009 to 2021-2022 [excluding FY 09-10 (NLD), FY 10-11 (ISP-IT) and FY 21-22 (UL-ISP)]. These demands were also challenged in a petition, before TDSAT wherein, after a detailed hearing, the TDSAT directed the DoT not to take any coercive actions against the Company till the final disposal of the petition. The matter is currently pending adjudication.

(e) Vide its demand letter dated September 13, 2023, DoT called upon the Company to pay an amount of H49.96 crore, for financial year 2021-22 in respect of UL-ISP license. The Company challenged the said demand in a petition before TDSAT wherein, after a detailed hearing, the TDSAT directed the DoT not to take any coercive actions against the Company till the final disposal of the petition. While the petition is pending adjudication, DoT revised the demand subsequently vide demand letter dated February 3, 2025 to H37.36 crore based on Companys submissions.

(f) Vide its demand letter dated April 16, 2024, DoT raised license-fee demands of H77.65 crore for financial year 2022-23 in respect of the Companys ILD, NLD and ISP license authorisation under Unified License. These demands have also been challenged by the Company in a petition before TDSAT, wherein, after a detailed hearing, the TDSAT directed the DoT not to take any coercive actions against the Company till the final disposal of the petition. While the petition is pending adjudication, DoT revised the demand subsequently vide demand letter dated February 3, 2025 to H22.09 crore against earlier demand of H62.21 crore under UL-ISP based on Companys submissions. Total demand for FY 22-23 stands revised to H37.53 crore.

(g) Vide its demand letters dated October 30,

2024, November 22, 2024, and January 14,

2025, DoT raised license fee demands of H25.14 crore for financial year 2023-24 in

respect of UL-ISP, UL-NLD and UL-ILD license. This includes deductions of H2 crore disallowed in respect of UL-NLD and UL-ILD licenses. The Company has also challenged these demands in a petition before TDSAT, wherein, after a detailed hearing, the TDSAT directed the DoT not to take any coercive actions against the Company till the final disposal of the petition. The matter is currently pending adjudication.

ii. The Company had filed a petition before TDSAT challenging the penalty provisions under its International and National Long Distance License Agreements. Some other telecom operators had also filed petitions before TDSAT on the same issue. By a common order dated February 11, 2010, TDSAT allowed the said petitions, thereby entitling the Company for a refund of H115.73 crore, being the penalty and interest thereon realised by DoT, in January 2008. Under TDSATs order of May 2012, DoT refunded to the Company, an amount of H226.23 crore (H115.73 crore plus interest), and simultaneously challenged the order in the Supreme Court of India under an appeal, which is still pending.

iii. In 2013, the DoT introduced a new Unified License (‘UL) regime for Internet Service Providers (‘ISPs) that replaced the old service-specific license regime and imposed a license fee of 8% of AGR on pure internet services revenue under the new UL- ISP Licenses. This created a non-level playing field among ISPs. In 2014, the Company applied to the DoT for a new UL-ISP license with the condition that the Company would not pay the new license fee on pure internet services revenue to maintain a level playing field with service providers not yet subject to the new license fee regime and requested an extension for the old service-specific ISP license. DoT, while extending the old license to enable the Company to complete the formalities for obtaining UL, imposed a license fee on internet services, which was challenged by the Company along with Internet Service Providers Association of India before TDSAT. At its hearing on March25, 2014, TDSAT granted a stay on payment of license fee on pure internet services and provisionally extended the Companys license during the pendency of the litigation. TDSAT granted similar stays on petitions filed by other service providers on imposition of license fee on pure internet revenue by DoT. Vide judgement dated October 18, 2019, TDSAT allowed the petition, and the decision of DoT to include the revenue from pure internet services as part of AGR for levy of license fee on ISPs under Unified License regime, was set aside and directed DoT to raise revised demands of license fee, based on the same concept of AGR as was being done in respect of ISPs holding a license under the old regime. TDSAT expressed its expectation for the DoT to expedite the process of taking a decision keeping in view the relevant

recommendations of Telecom Regulatory Authority of India as well as the constitutional requirement of providing and safeguarding a ‘level playing field for all ISPs. DoT was further directed to take action without any delay to end the uncertainty. DoT filed a Civil Appeal before the Honble Supreme Court challenging TDSATs judgment. The said Civil Appeal was listed on January 5, 2021 and the Supreme Court, after hearing the submissions, condoned the delay in filing of the appeal and issued notice that in the event the appeal succeeded, the respondents would be subject to such final directions as may be passed by the Supreme Court in its judgement. While the Civil Appeal was pending, DoT on March31,2021, issued amendments to licences granted under the 2002 and 2007 guidelines, subjecting such licenses to payment of 8% license fee on the revenue from pure internet services with immediate effect.

On August 6, 2021, the Company was granted a UL with internet service authorisation effective from January 25, 2014.

In October 2021, DoT again amended the definition of Gross Revenue provided in various licenses, accepting the representations of various operators that revenue from non-licensed activities should not be included while calculating license fees.

The matter is pending before Supreme Court for final adjudication.

3. Access Costs on Cable Landing Stations (‘CLS)

The Telecom Regulatory Authority of India (‘TRAI) issued the International Telecommunication Access to Essential Facilities at Cable Landing Stations Regulations, 2007 (‘2007 Regulations) on June 7, 2007, authorising the owners of Cable Landing Stations (‘CLS) to fix their own cost-based charges for access to CLS, after obtaining approvals from TRAI. In 2012, TRAI amended the 2007 Regulations vide Amendment Regulation dated October 19, 2012, empowering itself to specify / prescribe these charges, and thereafter issued another regulation dated December 21, 2012 prescribing a uniform access charge in the form of a ceiling which led to an almost 90% reduction in the charges prevailing prior to issuance of these regulations. All these regulations were challenged by the Company by way of a Writ Petition filed in the Honble High Court of Madras. In 2016, a single judge bench of the Madras High Court, dismissed the Writ Petition filed by the Company and the Company filed an appeal before the division bench of the Madras High Court. Since the division bench refused to grant interim stay to the Company while deciding to hear the Writ Appeal finally and kept the Misc. Petition for interim stay pending, the Company filed a Special Leave Petition (‘SLP) before the Honble Supreme Court of India. The Supreme Court requested the division bench of the Madras High Court to dispose of the appeal at the earliest. The Division Bench of Madras High Court, vide its judgment dated July 2, 2018, partly allowed the Writ Appeal and quashed the schedules to the regulations

which prescribed charges, kept the CLS Regulations in abeyance and further directed TRAI to rework the schedules within a period of six months. In October 2018, TRAI and other parties filed an SLP in Supreme Court against the judgement of July 2018 in which the Supreme Court ordered TRAI to re-work the figures within a period of six weeks from October 8, 2018. TRAI reworked and reenacted the schedules and issued amendment regulations with effect from November 28, 2018.

On November 11, 2018, the Company filed another SLP before the Supreme Court against the division bench order dated July 2, 2018, challenging the jurisdiction of TRAI to regulate CLS.

In December 2018, the Association of Competitive Telecom Operators (‘ACTO) filed an application in Supreme Court seeking direction and interpretation that the November 28, 2018 regulations may be declared to be effective retrospectively. This application was disposed of by the Supreme Court on January 28, 2019, stating that it is not for the Supreme Court to give any interpretation and the matter may be taken up in Telecom Disputes Settlement and Appellate Tribunal and consequently remanded the matter to TDSAT.

ACTO and Reliance Jio filed their separate petitions before TDSAT in pursuance of the Supreme Courts order dated January 28, 2019 seeking retrospective applicability of November 28, 2018 regulation. BSNL also filed a petition before TDSAT. Vide its judgement dated April 16, 2020, TDSAT dismissed the petitions filed by ACTO, Reliance Jio and BSNL and held that the amendment regulations would be applicable prospectively. Aggrieved by the said order of TDSAT, ACTO, Reliance Jio and BSNL have filed their Civil Appeals before the Supreme Court challenging the TDSAT order dated April 16, 2020 and sought stay of the TDSAT order, which was not granted.

Subsequently, as there was no stay order in the matter, the Company, in consultation with Senior Advocate and Counsel, issued a disconnection notice dated July 19, 2022 against Reliance Jio wherein Reliance Jio was asked to clear its AFA (Access Facilitation Charges) outstanding at the earliest, failing which its services would be disconnected. Reliance Jio filed an application for staying the said disconnection notice before Honble Supreme Court. The said application was listed before the Court of Honble Chief Justice and during the course of hearing, the Company highlighted the fact that Reliance Jio has not been granted any stay in the matter and is enjoying the services without clearing its pending outstanding. The Honble Supreme Court directed Reliance Jio to make a payment of H70 crore and subject to the payment of the said amount, directed the Company, not to disconnect the services.

On January 13, 2026, pursuant to a legal opinion received from Senior Advocate and with a view to expediting the hearing of the pending civil appeals, particularly in light of the Companys substantial recoveries due from Reliance Jio, the Company made submissions

before the Honble Supreme Court seeking withdrawal of Tata Communications SLP challenging TRAIs powers to regulate CLS. Pursuant to these submissions, the Honble Supreme Court dismissed Tata Communications SLP as withdrawn.

It was further submitted that the remaining civil appeals filed by Reliance Jio and others are now confined to the limited issue of retrospective applicability of the CLS Regulations from 2013 as against 2018 and hence same may be heard expeditiously.

The matter is pending final adjudication before Honble Supreme Court.

4. Premature termination of exclusivity and compensation

As previously reported, the Government of India terminated the companys exclusivity in the International Long Distance (ILD) business two years ahead of schedule and allowed other players to enter the ILD business from April 1, 2002. The government offered the Company a compensation package for this early termination under the terms of a letter dated September 7, 2000. It also gave the Company an assurance that it would consider additional compensation, if found necessary, following a detailed review of its decision to open up the ILD market.

Contrary to its assurances, on January 18, 2002, the government issued a further letter to the Company, unilaterally declaring that the compensation package provided in its original letter was to be treated as full and final settlement of every sort of claim against the early termination of the Companys exclusivity rights in the ILD business. The Company filed a suit in the Bombay High Court in 2005. On July 7, 2010, the Bombay High Court ruled that it did not have the jurisdiction to hear this suit, in view of the provisions of the Telecom Regulatory Authority of India Act, 1997. Aggrieved by this order, the Company instituted an appeal before a division bench of the Bombay High Court on various grounds. The appeal has been admitted by the Court and is pending hearing.

CAUTIONARY STATEMENT

Certain statements in the Integrated Annual Report, Boards Report and MDA describing Tata Communications objectives, projections, estimates and expectations may be ‘forwardlooking statements within the meaning of applicable securities laws and regulations. Actual results could differ substantially or materially from those expressed or implied. Important factors that could make a difference to our operations include economic conditions affecting demand / supply and price conditions in the domestic and overseas markets in which we operate, changes in government regulations, policies, tax laws and other incidental factors. Further, Tata Communications retains the flexibility to respond to fast-changing market conditions and business imperatives. Therefore, Tata Communications may need to change any of the plans and projections that may have been outlined in this report, depending on market conditions.