Tata Communications Ltd Management Discussions

MACROECONOMIC & GEOPOLITICAL OVERVIEW

In CY2024, the global economy grew at 3.3%, showing resilience amid geopolitical conflicts, trade fluctuations and shifting monetary policies. However, the IMFs World Economic Outlook (April 2025) has slightly revised the global growth forecast downward to 2.8%, highlighting the need for stronger international cooperation.¹

This adjustment reflects the impact of trade policy shift, particularly renewed tariff measures introduced by the US, which have posed significant pressure on global supply chain and pricing. Effective policy coordination and prudent fiscal management can mitigate these challenges and avert deeper disruptions.

The US economy is expected to grow by 1.8% in 2025, following a growth of 2.8% in 2024. The growth outlook for India is stable at 6.2% in 2025 and 6.3% in 2026, supported by private consumption, particularly in rural areas. Chinas growth outlookstands at 4%, reflecting ongoing adjustments and shifts in trade and demand. Meanwhile, other emerging markets are navigating tighter financial conditions but continue to pursue reforms and partnerships that strengthen their economic resilience.

Global disinflation remains underway, with inflation projected to ease to 4.3% in 2025 and further to 3.6% in 2026. However, inflation expectations for the United Kingdom (‘UK) have been raised from 3.2% to 3.9%, and for the US, from 3.3% to 4.3%.² This upward adjustment reflects persistent pricing pressures in the services sector, a recent rebound in core goods inflation, and the impact of newly imposed US tariffs. Inflation expectations for India are projected to remain stable at 4.1% in both 2025 and 2026, indicating a balanced interplay between supply-side factors and domestic demand. These projections align with the Reserve Bank of Indias medium- term inflation target, supported by consistent and calibrated monetary policy measures.

However, inflation in emerging and developing Asia, including China, is forecast to remain subdued, creating room for targeted policy support and sustained domestic demand.

Global trade volumes are expected to grow at a more modest pace of 1.7% in 2025. Although trade has been impacted by tariff increases and geopolitical developments, supply chains are demonstrating adaptability. Ongoing diversification efforts, technology adoption, and new trade negotiations are helping mitigate the effects of protectionist measures and logistical challenges. These developments highlight the capacity for adjustment and innovation across global markets.

In addition to the risks posed by shifting economic policies, rising geopolitical tensions are increasingly reshaping the global economic outlook. Several key flashpoints are now exerting significant influence over macroeconomic dynamics:

US trade policies and related uncertainties

Since early 2025, the United States has implemented a series of tariffs to safeguard its domestic economic interests, including a 10% blanket tariff on global imports and an additional 25% levy on imported vehicles, steel and aluminium, effective from April 2025. These measures initially triggered uncertainty across global markets, as businesses and consumers grappled with potential inflationary pressures and employment concerns.

However, on April 9, the US took steps to ease tensions by suspending country-specific tariffs for 90 days and instituting a uniform 10% tariff for all nations except China. This move was followed by more constructive developments, including a limited trade agreement with the UK and a 90- day tariff truce with China, which saw tariffs reduced from 145% to 30%. Ongoing trade negotiations with India and Japan further signal a shift towards greater collaboration and equilibrium in global trade dynamics.

The impact on India:

India was initially impacted by a 26% tariff imposed on April 2, higher than those on the EU, Japan and South Korea - leading to short term market adjustments including a temporary dip in the Sensex and value of Rupee. Following April 9 policy shift, the overall rate was reduced to 10%, to offer some relief.

At a sectoral level:

• Pharmaceuticals were spared, providing relief to a US$12.2 billion export sector.

• Automobiles, which constitute 3% of Indian exports to the US, now face softer demand and rising costs.

• IT Services saw the Nifty IT index decline by 3% amid recessionary concerns in the US.

• General exports such as steel, electronics, and gems are expected to suffer from reduced price competitiveness.

In response, India is actively pursuing a bilateral trade deal with the US, while exporters explore cost-sharing mechanisms and market diversification strategies to mitigate impact. The broader economic challenges posed by these tariffs are being managed through a combination of policy diplomacy and private sector resilience.

Tata Communications is closely monitoring these evolving dynamics and proactively implementing strategies to mitigate associated risks across its global operations.

Russia-Ukraine conflict

Russia continues to face multifaceted geopolitical challenges, from the prolonged Ukraine conflict and strained Western relations to growing NATO tensions and heavy dependence on energy exports. In response, it is deepening alliances with China and other BRICS nations, recalibrating its economic model, enhancing military capabilities, and working to maintain internal stability. As on March 2025, US-Russia ceasefire talks on Ukraine may signal a shift in Russias political and economic trajectory in the months ahead.

Israel-Gaza conflict impacting trade routes in the Red Sea

The Israel-Gaza conflict has had far-reaching effects on global trade routes. Houthi-led attacks from Yemen have significantly disrupted maritime traffic in the Red Sea, leading to:

• A 50% drop in Suez Canal traffic

• An 80-100% rise in transit costs due to rerouting via the Cape of Good Hope

• Severe damage to telecommunications infrastructure in the region

As 2025 unfolds, the global economy remains vulnerable to a confluence of risks — from escalating trade disputes and protectionism to inflationary pressures and supply chain disruptions. These uncertainties highlight the need for businesses, investors and policymakers to remain agile and vigilant amid ongoing global disruptions.

INDUSTRY OVERVIEW

During the year the technology industry has navigated multiple headwinds but the industry appears poised for growth. According to Gartner, in 2025, more than 80% of CIOs plan to invest in foundational capabilities such as cybersecurity, Generative Al (‘GenAI), business intelligence and data analytics, and integration technologies like APIs.³

Similarly, the telecommunications sector is adapting to rising global demand, evolving its offerings to meet the needs of digitally transforming enterprises. As core telecom services become commoditised, constraining pricing power and necessitating continued infrastructure investment, operators are actively pivoting towards growth. The focus is now on leveraging GenAI, shaping the future of 5G/6G, deploying emerging technologies strategically, and pursuing growth through mergers and acquisitions.

Here are a few key trends that are reshaping the technology and telecommunications landscape:

• Surge in Global IT spending

The global appetite for IT services is set to grow significantly in 2025 with organisations scaling tech investments to harness Al as a revenue driver. Gartner forecasts, global IT spending⁴ will reach US$5.6 trillion in 2025, up 7.5% from 2024. Propelled by GenAIs rapid mainstream adoption, midterm growth expectations have been upgraded to a CAGR of 7.9% from 2023 to 2028, with total spending expected to reach US$7.4 trillion by 2028.

Here are the key drivers:

• As GenAI moves from pilot to production,

segments like data centre systems, devices and software are projected to see double-digit growth in 2025, largely due to GenAI hardware upgrade.

• By 2026, more than 50% of enterprise

software spend in application software will be influenced by GenAI.

• Investment will intensify in platforms enabling scalable Al deployments — particularly around agentic Al with autonomous gen Al agents that can complete complex tasks with minimal human input.

• Communication services will gain strategic

importance, especially fixed data services, which are projected to grow at a CAGR of 3.2% in five- years through 2028⁵. High-growth industries

include communications, media and services, power and utilities and healthcare.

• Cybersecurity: A Strategic Imperative

With the global cost of cybercrime projected to hit US$10.5 trillion⁶ in 2025, risk management and cybersecurity will dominate C-suite priorities. Rising threats from loT, cloud expansion, and GenAI-driven sectors are widening the attack surface. In response:

• The global market for security solutions is expected to exceed US$200 billion by 2028.

• Cybersecurity spending will rise sharply, reinforced by geopolitical risks and regulatory mandates.

• Organisations are enhancing visibility and reporting through advanced compliance technology, although fragmented data remains a challenge.

• Cloud Transformation: Toward Hybrid and Multicloud

The global spend on public cloud services is projected to reach US$805 billion in 2024, and is expected to double by 2028, driven by scalability, efficiency and Al integration. While public cloud has dominated investments, outpacing those for private cloud by more than 3:1 in recent years, businesses are reassessing the balance between public and private cloud, with hybrid and multicloud strategies gaining traction to maximise flexibility and control,⁶

• Telcos Embrace GenAI to Reinvent and Scale

Telecom service providers are increasingly using GenAI to streamline operations, reduce costs, and create new service offerings. Their deep expertise in connectivity, edge computing, and Al-enabled network management positions them well to drive value in an Al-first world.

Key Opportunities

• Data Centres and Long-Haul Fiber: Telcos can play a central role in connecting hyperscale data centres and providing long-haul fiber connectivity for Al applications. While major tech firms are building their own infrastructure, telcos can still offer regional and global connectivity, especially as network capex from tech giants is projected to exceed and US$100 billion between 2024 and 2030.

• Monetising GenAI-Driven Data Growth: GenAI is generating exponential data traffic. While current use cases are not bandwidth-intensive, future applications such as Al powered video) could drive significant premium demand for ultra-low latency services.

• Edge Computing Advantage: As smart devices integrate Al chips, demand will shift towards edge computing. Telcos are uniquely positioned to deliver on this transition, with real-time data processing closer to the source. Though this shift is expected to scale from 2026 onwards, strategic investment now can yield long-term advantage.

• Investments in Cybersecurity and Data Compliance •

With mounting regulatory scrutiny⁷, businesses are investing heavily in data protection and compliance. Executives anticipate rising cybersecurity budgets — fuelled by both proactive risk management and mandatory compliance requirements. To navigate this complex landscape, businesses are adopting integrated solutions that improve decision-making, reporting, and visibility, while continuing to evolve governance frameworks.

• Increased M&As and partnership activity to gain competitive advantage and scale

2024 witnessed a wave of transformative tech deals, combining strengths in infrastructure, software, security, and Al. Beyond traditional M&A, the industry • is embracing alternative deal structures — such as joint ventures and strategic alliances, especially effective in times of economic and regulatory uncertainties. Partnerships in Al infrastructure, energy-efficient software, cybersecurity, and professional services are accelerating innovation and unlocking new growth opportunities. In 2025, technology and telecom players •

are doubling down on innovation with a sharp focus on security, reliability, and trust. As enterprises embrace transformation at scale, the industry is redefining itself not just as an enabler of digital change, but as a driver of long-term sustainable growth.

POLICY DEVELOPMENTS IN INDIA FOSTERING GROWTH IN THE ICT INDUSTRY

Strengthening the Telecom Ecosystem

The Department of Telecommunications (DoT) made significant progress in 2024, advancing Indias digital ambitions through key initiatives focused on connectivity, inclusion, and innovation⁸. Key developments include:

The Telecommunications Act, 2023: Replacing colonial era legislation, the Indian government introduced the Telecommunications Act, 2023, in place of the Indian Telegraph Act, 1885 and other laws namely, the Indian Wireless Telegraphy Act, 1933 and the Telegraph Wires (Unlawful Possession) Act, 1950; and also amended the Telecom Regulatory Authority of India (TRAI) Act, 1997. The Bill modernises the legal framework governing Indias telecom sector. It promotes innovation, competition, and secure service delivery, while aligning with best global practices. The Act also addresses critical issues such as cybersecurity threats, data privacy, and regulatory clarity.

Accelerated 5G Rollout: India achieved the worlds fastest 5G deployment. By March 2024, India had 4,62,000 5G base stations covering nearly 99% of all districts. This rapid rollout is expected to catalyse transformation across sectors including healthcare, education, manufacturing, and agriculture.

Explosive Growth in Internet Access: I nternet subscriber numbers surged 285%, reaching 969 million by June 2024. This growth is a major driver of digital inclusion and is accelerating socio-economic development across urban and rural India.

• World-Leading Data Affordability: With data costs at just US$0.16 per GB, far below the global average of US$2.59, India continues to lead in affordable connectivity. This has expanded internet access, boosted digital literacy and supported inclusive digital growth.

• Launch of the Sanchar Saathi Portal: The Government of India introduced the Sanchar Saathi portal to combat telecom-related cybercrime and fraud. The portal, which, inter-alia, enables users to trace stolen mobile phones

and report misuse, attracted over 90 million visitors in its initial phase, underscoring its relevance and impact.

• Global Leadership in Telecommunications: India hosted the World Telecommunication and Standardization Assembly (WTSA-24) in 2024, reinforcing its position as a global leader in the telecom industry and showcasing its infrastructure and regulatory advancements.

• Economic Impact and Job Creation: Continued investment in telecom sector advancements have generated substantial employment, especially in telecom manufacturing, digital services, and IT. These efforts are aligned with Indias vision of becoming a US$5 trillion economy.

Together, these initiatives reflect the Government of Indias

strategic push to build a future-ready, secure and inclusive

digital ecosystem that accelerates national progress.

Union Budget 2025-26: Key tech announcements

• BharatNet Expansion: The Union Budget 2025-26⁹ outlined a series of technology-forward proposals designed to enhance Indias position as a global digital powerhouse. These include tax reforms, policy incentives, and infrastructure investments aimed at driving innovation and fostering a resilient digital economy. Broadband connectivity will be extended to all government secondary schools and primary health centres in rural areas, under the BharatNet project — closing the digital divide and improving access to essential services.

• Al Centre of Excellence in Education: A new Centre of Excellence in Al will be established within the education sector, with an outlay of Rs500 crores. The initiative will promote Al education and research to equip students for a future-ready workforce.

• IndiaAl Mission Boosted with Rs2,000 crores: Launched in April 2024 with an initial budget of Rs10,400 crores, the IndiaAl Mission received an additional Rs2,000 crore in funding. This mission focuses on expanding Al research, computing capacity, and innovation across sectors such as healthcare, agriculture, and governance.

• Deep Tech Fund of Funds: The Government of India is expected to explore the creation of a dedicated Deep Tech Fund of Funds to support next-generation start-ups, particularly in Al and related fields. It also extended the start-up incorporation window by five years, signalling long-term commitment to nurturing innovation.

• MeitY Budget Increased by 48%: The Ministry of Electronics and Information Technology (‘MeitY) has been allocated Rs26,000 crores, an increase by 48% to further the IndiaAl mission and support production- linked incentive schemes for semiconductors, electronics, and IT hardware.

• Reduced Import Duties on Al Hardware: To spur domestic Al infrastructure, the Budget proposes reductions in import duties on Al hardware and introduces tax incentives for technology investments, helping India remain globally competitive.

• National Centres of Excellence in Skilling: Five National Centres of Excellence for Skilling are to be established through global partnerships to advance Indias ‘Make for India, Make for the World agenda. These centres will design industry-aligned curricula, train trainers, and set certification standards.

• Boost to Technological Research: Under the Prime Ministers Research Fellowship scheme, 10,000 fellowships will be offered over the next five years to support advanced research at premier institutions like NTs and lISc, with enhanced financial support.

• Tier-ll City Growth for GCC Ecosystem: Expanding infrastructure and talent availability in Tier-ll cities is a priority to strengthen Indias growing Global Capability Centre footprint — a key pillar in the countrys digital exports strategy.

• Opening Nuclear Energy to Private Investment: The

Government plans to amend the Atomic Energy Act, 1962 to enable private sector participation in nuclear energy, aiming to generate at least 100 GW by 2047. This is critical for supporting sustainable power demands of energy-intensive data centres and future Al infrastructure.

These policy and budgetary initiatives reaffirm the Government of Indias commitment to building a digitally empowered economy. With an emphasis on Al adoption, electronics manufacturing, innovation funding, and workforce transformation, India is poised to cement its position as a global technology leader. The convergence of public policy infrastructure investment, and digital ambition is unlocking new pathways for sustainable and inclusive growth.

SUSTAINABILITY IN TELECOM

Tata Communications acknowledges the critical role that the ICT industry can play in supporting sustainable growth and assisting businesses in reaching their Net Zero objectives. We believe that ICT platforms and other hyperconnected systems can assist companies in securing a sustainable future by addressing some of the most important global concerns in the ways listed below.

• Tackling the Climate Crises: Technologies such as 5G, Al, and Internet of Things (loT) can transform business operations, to meet international decarbonisation targets and help limit global warming to 1.5?C above preindustrial levels. Furthermore, hyperconnected systems can utilise energy efficiency and renewable energy technologies to reduce carbon emissions

through real-time adjustments for efficiency and cost-effectiveness.

• Augmenting Resource Efficiency: Monitoring resource utilisation and waste management, among other things, can be made easier by Al, loT, and other technologies that enable hyperconnected systems. Digital tracking systems can lower costs and have a beneficial environmental impact by reusing and refurbishing abandoned materials and devices.

• Fostering Social Accountability: Increasing human capital through efficient methods, improving skill sets, and learning novel concepts will give employees and communities new capabilities. This skill enhancement aids in adjusting to the hyperconnected ecosystem without causing disparities because of structural changes in digital workflows and workforce patterns. Through a greater understanding of the connection between business and society and an improvement in cultural intelligence, it also strengthens an organisations social responsibility.

• Securing New and Innovative Business Models:

A hyperconnected ecosystem helps build better products, improve customer experience and supplier relationships, and enhance transparency throughout the value chain. This provides sustainable competitive advantages to enterprises by building rich and interconnected communities.

SUSTAINABILITY AT TATA COMMUNICATIONS

Tata Communications prioritises sustainability by implementing sustainable practices across its operations. We have defined targets and a road-map to foster sustainability practices within our operations and value chain. The Natural Capital section of our Integrated Annual Report and the Business Responsibility and Sustainability Report (‘BRSR) provides detailed information on our sustainability initiatives. ORGANISATION OVERVIEW

Tata Communications is a global digital ecosystem enabler powering todays fast-growing digital economy in more than 190 countries and territories. Leading with trust, we enable digital transformation of enterprises globally with collaboration and connected solutions, core and next-gen connectivity, cloud hosting and cyber security solutions and media services. 300 of the Fortune 500 companies are our customers and the Company connects businesses to 80% of the worlds cloud giants.

With our solutions-orientated approach, proven managed service capabilities and cutting-edge infrastructure, Tata Communications drives the next level of intelligence powered by cloud, loT, customer interactions, cybersecurity and network services.

Over the last 25 years, enterprise-enabled services have been essential to the adoption of digital services in the country. From utility to transformation, connectivity is an essential fabric of sustenance for the economy. Tata Communications is committed to enabling enterprises to thrive in hyperconnected ecosystems, by delivering secure connected digital experiences.

OUR CULTURE

At Tata Communications, our culture is the cornerstone of our success. We have refined our core values to align with our Reimagine Strategy, focussing on six key tenets:

We foster digital dexterity in the workplace by equipping employees with the skills and mindset needed to thrive in a rapidly evolving digital landscape. Upskilling is not just encouraged but is intrinsically linked to our business objectives. Employees are empowered to explore, learn and create exceptional digital experiences for our customers. Our innovation framework further inspires and enables employees to bring new ideas to life.

To promote inclusive leadership, we have introduced an immersive learning journey for people managers, equipping them to lead diverse teams effectively. This initiative features webinars led by global diversity, equity and inclusion (DE&I) experts, as well as customised e-learning modules with assignments, case studies, and interactive social discussions.

OPPORTUNITIES AND THREATS

Opportunities

Customer and Market Expansion:

Tata Communications is pursuing a multi-dimensional growth strategy to deepen and broaden its market presence. By focusing on strategic accounts, we aim to drive higher value through deeper engagement, cross-sell, and upsell opportunities across our full portfolio. Additionally, there is a significant opportunity to go deeper with existing customers by offering the full spectrum of Tata Communications digital fabric—tailored to evolving enterprise needs. We are also acquiring new customers across industries in existing as well as newer markets through our sharpened go-to-market strategy.

Investments in Next-Gen Digital Solutions:

Tata Communications is accelerating innovation through sustained investment in next-generation digital solutions. These efforts are designed to meet the evolving needs of global enterprises seeking agility, scalability, and intelligence in their digital operations.

Al and Automation:

Embedding Al into core products and platforms to deliver intelligent, adaptive, and predictive services—enhancing customer experience, operational efficiency, and service innovation is a significant opportunity for Tata Communications. While Al adoption introduces risks such as data privacy and cybersecurity threats, Tata Communications is actively mitigating these through intelligent security systems, Al studio and data governance.

High Customer Satisfaction

With an industry-leading Net Promoter Score (NPS) of 82, the Company continues to build strong customer trust and satisfaction. The growing number of Million Dollar customers reflects the Companys ability to deliver consistent value and support enterprise-scale digital transformation initiatives.

Capitalising on Rising Service Demand Driven by Al Adoption

The rapid integration of Al across industries is driving a surge in demand for robust networks, scalable cloud infrastructure, and advanced cybersecurity solutions. Tata Communications is well-positioned to capitalise on this trend by strategically expanding its portfolio with enhanced offerings in key areas: network solutions (including Multi-Cloud Networking, Multi- Cloud Connectivity, and Data Centre Interconnects), cloud services (Al and Edge Cloud), and cybersecurity (SASE). These initiatives are designed to meet the evolving needs of enterprises both in India and globally.

Unlocking New Opportunities in loT and Mobility

The acquisition of Oasis has strengthened Tata Communications MOVE " portfolio by integrating advanced eSIM capabilities, opening up new opportunities across the mobility, automotive, and smart device sectors. This enhanced platform is designed to meet the surging demand for embedded, secure, and remotely manageable connectivity, enabling a broader range of loT and embedded connectivity use cases.

Industry-Aligned, Verticalised Solutions

As digital transformation accelerates, industries such as BFSI, manufacturing, healthcare, and automotive increasingly require tailored technology solutions that address their unique regulatory, operational, and compliance needs. In response, technology providers are shifting from generic offerings to integrated, sector-specific solutions. Tata Communications is seizing this opportunity by delivering customised, industry-aligned solutions that combine high-performance connectivity, secure cloud infrastructure, and intelligent data capabilities. These offerings are further strengthened by specialised managed services and strategic partnerships, enabling enterprises to drive innovation and efficiency within their respective sectors.

Strong Commitment to Sustainability

Tata Communications is actively advancing its sustainability agenda, targeting Net Zero emissions by 2035. The key initiatives include 100% renewable energy usage at multiple sites, 9.8 million kWh of energy savings through 169 energysaving opportunities and benefiting over 8,00,000 people through CSR projects.

Threats

Integration Challenges Post-Acquisitions

Newly acquired entities and incubation-stage businesses require integration time and investments, which may temporarily dilute overall margins despite improving the long-term portfolio strength.

Complex Competitive Landscape:

The Company faces pressure from multiple fronts: cloud providers expanding into telecom, system integrators offering broader managed services, OEMs entering cybersecurity, niche technology vendors directly targeting enterprises and traditional telecom players intensifying their focus on business services. This evolving landscape underscores the growing importance of strategic collaboration and the delivery of integrated, end-to-end solutions to maintain differentiation and

market relevance.

Risks from Macroeconomic and Geopolitical Uncertainties

Tata Communications operates in a global environment increasingly shaped by macroeconomic volatility and geopolitical tensions. Factors such as infrastructure disruptions, evolving regulatory frameworks, and trade restrictions can impact cross-border data flows, network reliability, and enterprise IT spending. Additionally, the Companys dependence on third-party vendors for service delivery introduces further risk—any disruption in their operations can have a direct and immediate effect on Tata Communications ability to serve its customers.

Evolving Regulatory Landscape

The regulatory environment is becoming increasingly complex, with stricter data sovereignty requirements, cross-border compliance obligations, and sector-specific regulations. These evolving mandates demand continuous adaptation and sustained investment in robust governance frameworks to ensure compliance, mitigate risks and maintain operational

resilience across global markets.

Margin Pressure

Although the digital portfolio is growing rapidly, achieving sustainable profitability in digital services will require continued scale, cost optimisation and successful execution of product roadmaps.

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• Financial Fitness: We are committed to maintaining a robust balance sheet and achieving double-digit profitable growth, underpinned by rigorous compliance.

• Growth Plan: Our ambition is to enhance our relevance by evolving from a product-centric to a platform-driven digital fabric.

• WHO: Deepening engagement and intimacy with our top customers, adopting a solution-oriented approach, and ensuring flawless execution to elevate them to higher revenue bands.

• WHAT: Developing scalable, differentiated platform offerings that set us apart in the market.

• HOW: Driving operational efficiency to support sustainable growth.

• Core focus areas include Sustainability, Al and Innovation.

• Culture: We are dedicated to nurturing a culture that embodies collaboration, ownership, accountability, a ‘can do attitude, growth mindset, agility, continuous learning, skills-transformation, innovation, and problem solving.

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 capabilities and deliver tangible value.

• Invest in technological innovation to enhance our offerings, optimise assets, and drive demand, thereby expanding our market presence.

For our strategy to succeed, these shifts must interlock and operate in harmony. We are proud of the progress we have made and remain focussed on accelerating these strategic themes to drive sustained growth.

CUSTOMER SEGMENTATION

Tata Communications serves two major customer segments:

• Enterprise

• Service Providers

Each segment is addressed through a well-defined route-to- market (RTM) strategy tailored to its unique needs.

Enterprise

In the post-pandemic era, digital transformation is fundamentally reshaping business operations, accelerating the adoption of hybrid work models and e-commerce. Enterprises increasingly recognise the strategic importance of digitalisation, leveraging it to drive borderless growth, foster product innovation, enhance customer experience, improve productivity and efficiency, build agility, and manage risk. These five drivers present significant opportunities for Tata Communications to deliver differentiated platforms, solutions, and services. Our goal is to be the partner of choice in our customers digital transformation journeys, enabling workforce collaboration, enterprise mobility, and omnichannel access to end customers. To maximise emerging opportunities, we have further refined our enterprise market strategy, targeting specific verticals and sectors beyond media.

Hyperscale cloud providers / Over-the-top (OTT) players represent a rapidly expanding enterprise segment, accounting for the majority of global IP traffic. Tata Communications supports their growth with robust connectivity solutions, including:

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

• Subsea cable capacity for intercontinental data transfer

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

Our offerings enable OTTs to address the explosive growth in global data consumption with reliability and scalability.

Service Providers

The service provider segment is propelled by surging global data consumption, primarily driven by end consumers. To support this segment, Tata Communications offers an integrated portfolio of services, including:

• 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 reliable platforms empower service providers to remain relevant and agile in a rapidly evolving market landscape.

BUSINESS EXCELLENCE

At Tata Communications, we are dedicated to business excellence, continuously enhancing our management systems and processes to deliver superior value to all stakeholders. Our efforts are guided by the Tata Business Excellence Model (‘TBEM), inspired by the Malcolm Baldrige Business Excellence Framework.

The TBEM framework enables us to systematically analyse our business processes and identify improvement opportunities across leadership, strategy customer engagement, knowledge management, workforce development, operations, and business results. We conduct rigorous assessments every two years to evaluate process maturity and outcomes, driving continuous improvement.

In the 2023 assessment cycle, Tata Communications achieved two significant milestones:

• Business Excellence Assessment (‘TBEM): We attained a TBEM score of 668, an improvement of 63 points over our previous assessment (on a 1000-point scale), earning recognition as an ‘Industry Leader.

• Data Maturity Assessment (‘DATOM): Our data operations received a DATOM score of 3.23, reflecting a ‘synergized maturity level, an advancement from the previous score of 3.17.

This consistent progress underscores our unwavering commitment to data-driven excellence and operational maturity across the core dimensions of data, technology, process, and people.

In response to insights from the 2023 TBEM assessment, we initiated several measures to enhance our management systems and deliver greater stakeholder value. Through the ‘Enhancing Social Fabric/HR Social program, we are cultivating a culture rooted in DRIVE behaviors, empathy, and psychological safety. This is supported by regular BUHR-employee meetings, GMC dialogues, and themed sessions with business units—fostering open communication and deeper team engagement.

Our agile 1-3-30 framework accelerates the scaling of new offerings by prioritising early customer feedback, clear ownership, and transparent metrics—enabling faster product-market fit and informed decision-making.

We are also advancing Data Maturity by promoting data literacy, improving data quality, and automating data flows. These efforts are unlocking GenAI use cases and driving measurable outcomes across our digital transformation journey.

FINANCIAL PERFORMANCE

We remain steadfast in our commitment to enhancing products and services that empower our customers in their digital transformation journeys, while simultaneously strengthening our balance sheet. Our Financial Fitness strategy is centred around delivering profitable revenue growth, generating robust cash flows and optimising working capital efficiency.

Our approach to sustainable, profitable growth is anchored in our finance strategy built on the twin pillars of ‘Fit to Compete and ‘Fit to Grow. These pillars form the foundation of our efforts to drive market capitalisation and maximise shareholder value. By maintaining a sharp focus on profitability and financial strength, we are well positioned to pursue both organic and inorganic growth opportunities, further reinforcing our leadership in the market.

Financial Performance (Standalone)
Particulars	FY 2024-25	FY 2023-24	YoY growth (%)	Reasons for deviation more than 25%
Net Revenue (Rs in crores)	7,277.86	7,991.68	(8.93)	-
EBITDA (Rs in crores)	1,596.23	1,903.51	(16.14)	-
PAT (Rs in crores)	1,050.87	638.63	64.55	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, interest on tax related to license fees, and staff cost optimisation during the year. For further details, please refer to Note 33 of the standalone financial statements.
Net Profit Margin (in %)	14.44	7.99	80.73
Return on Net Worth (in %)	10.33	6.47	59.66
Operating Profit Margin (in %)	8.41	10.83	(22.35)	-
Debt Equity Ratio (in times)	0.31	0.27	14.81	-
Interest Coverage Ratio (in times)	6.78	12.24	(44.61)	Decreased mainly due to short term borrowings availed during the year. Increased mainly due to investments made and short-term borrowings availed during the year.
Current Ratio (in times)	0.54	0.43	25.58
Debtors Turnover (in times)	6.02	6.69	(10.01)

HUMAN RESOURCES

The Human Capital section of our Integrated Annual Report highlights the diverse capabilities, competencies and experience of our workforce, as well as our ongoing efforts to deliver a holistic employee experience and foster a vibrant, high-performing work culture.

RISK MANAGEMENT

Operating globally across multiple industry segments, Tata Communications faces a complex and competitive landscape, exposing us to a wide array of internal and external risks. We proactively implement comprehensive measures to mitigate

these risks, guided by a holistic risk management framework that enables us to identify, assess and address any material impacts on our operations. By considering a broad spectrum of scenarios, we are able to make informed decisions that sustain our global market leadership.

Internal control systems and their adequacy

We maintain robust internal control mechanisms, with clearly defined financial authority delegated at 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 a critical component of our annual internal audit programme, encompassing all businesses and functions. Alongside internal audits, we conduct thorough reviews and testing of key internal controls related to financial reporting, providing assurance to the Management, Risk Management Committee, Audit Committee and the Board of Directors regarding their effectiveness.

Our Board has instituted a comprehensive ERM framework to facilitate early risk identification and proactive management. The Risk Management Committee oversees critical risks that may impact organisational performance and strategic initiatives. We systematically identify and assess risks across strategic, financial, operational, sectoral (market/ competition), legal and regulatory, technology, and ESG dimensions, and implement targeted treatments and control measures to mitigate their impact. We also monitor events that may present opportunities, leveraging them to benefit the organisation.

The Global Management Committee (‘GMC), comprising the CEO, CFO and key business and operations leaders is responsible for the effective implementation and ongoing enhancement of our risk management system. Tata Communications risk management procedures are subject to a continual improvement process, ensuring we remain agile and resilient in a dynamic business environment.

We adhere to a suite of established risk management policies and procedures across all business units and operations, guided by experience, industry best practices and principles of good governance. This proactive approach helps mitigate potential adverse impact on the business due to changes in the external and internal environment, aligning with our commitment to achieving corporate objectives and delivering long-term value to stakeholders.

An overview of key business risks and mitigation strategies is provided in the Governance 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 cross-appeal 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. Also, 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 Rs875.80 crores, 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 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.

(b) Vide its demand letter dated August 8, 2023, DoT called upon the Company to pay an amount of Rs992 crores, 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 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.

(c) Vide its demand letter dated August 11, 2023, DoT called upon the Company to pay an amount of Rs51 crores, 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 raised certain license fee demands of Rs6,159 crore (of which, enforceable demand is of Rs3,785 crore and Rs2,374 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 2009-10 (NLD), FY 2010-11(ISP-IT) and FY 2021-22 (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 Rs49.96 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 Rs37.36 crore based on Companys submissions.

(f) Vide its demand letter dated April 16, 2024, DoT raised license-fee demands of Rs77.65 crores 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 Rs22.09 crore against earlier demand of Rs62.21 crore under UL-ISP based on Companys submissions. So, total demand for FY 2022-23 stands revised to Rs37.53 crore.

(g) Vide its demand letters dated October 30,

2024, November 22, 2024, and January 14,

2025, DoT raised license fee demands of Rs25.14 crores for financial year 2023-24 in respect of UL-ISP, UL-NLD and UL-ILD license. This includes deductions of Rs2 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 Rs115.73 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 Rs226.23 crores (Rs115.73 crores 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 fora 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 March 25, 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 Flonble 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 March 31, 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 Flonble 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 Flonble 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 re-enacted 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 Flonble Supreme Court. The said application was listed before the Court of Flonble 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 Flonble Supreme Court directed Reliance Jio to make a payment of Rs70

crore and subject to the payment of the said amount, directed the Company, not to disconnect the services.

The matter was adjourned and the same is pending final adjudication before Flonble Supreme Court.

4. Premature terminationof 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. This appeal was admitted and is yet to come up for a hearing.

CAUTIONARY STATEMENT

Certain statements in the Integrated Annual Report, Boards Report and MDA describing Tata Communications objectives, projections, estimates and expectations may be ‘forward- looking 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.