Good evening, everyone, welcome to the Tata Communications Institutional Analysts and Investors Conference Call. We are joined today by our MD and CEO, Mr. Amur S. Lakshminarayanan, our CFO, Mr. Kabir Ahmed Shakir, our Chief Strategy Officer, Mr. Tri Pham, our Head for Collaboration and Solutions, Mr. Mysore Madhusudhan, Mr. Troy Reynolds, our Chief Legal and Compliance Officer, Sir Zubin Adil Patel, our Company Secretary, and our Head for Investor Relations, Mr. Rajiv Sharma. Our acquisition of Kaleyra Inc. has been announced today, and the details of the same are available on our website. I trust you would have had the chance to look through the key highlights. At the end of the management's remarks, you will have an opportunity to get your queries addressed. Before we get started, I would like to remind everyone that some of the statements made or discussed on the conference call today may be forward-looking in nature and must be viewed in conjunction with the risks and uncertainties we face. A detailed statement and explanation of these risks are included in our annual filings, which you can locate on our website, www.tatacommunications.com. The company does not undertake to update these forward-looking statements publicly. With that, I would like to invite Rajiv to share the initial brief, followed by the opening remarks from Lakshmi. Over to you, Rajiv. A very warm good evening to you all. I hope you got a chance to go through the press release and the investor presentation regarding our announcement that Tata Communications has entered into a definitive agreement to acquire Kaleyra, Inc. Kaleyra, Inc. is a global multi-channel integrated communication service provider, a global CPaaS player, meeting the stringent needs of leading enterprises with robust product and platform offerings. Last reported revenues of $339 million in calendar year 2022. The estimated enterprise valuation for the transaction is seen roughly around $250 million. Equity shareholders will be paid fully in cash, and the agreed price per share is $7.25 per share. The aggregate consideration is expected to be around $100 million, as may be adjusted by any payments required to Kaleyra warrant holders or holders of restricted stock units, which vest upon change of control. This transaction has been approved today by the board of directors of both Tata Communications and Kaleyra, Inc. Consummation of the deal is subject to approval by Kaleyra stockholders, certain regulatory approvals, and other customary closing conditions. Now, let me invite our MD and CEO, Lakshmi, to discuss this further. Hi. Hello, everyone, and a very warm good evening to all of you. Very pleased to meet you so soon post the Investors Day that we held the other month. Let me start from where we left on the Investors Day. We are taking another step towards strengthening our com-tech capabilities. Foremost, we are really excited about the CPaaS market, and this market is estimated to grow at 25% plus the CAGR in the next few years to an estimated $27 billion. Most of this growth is seen from India, U.S., and APAC. Kaleyra, Inc. has 54% of its revenues from U.S. and 13% from India, and is a market leader in Italy, which contributes to 18% of its total revenues based on their last reported quarter. The company has strong hold in sectors like financial services, which contributes 30%, retail and digital commerce, contributing 16% across the global markets. Top 10 customers of the company account for 45% of these total revenues, reflecting customer stickiness and platform robustness. With this acquisition, we will benefit from a strong talent pool of Kaleyra, which will work alongside team Tata Communications to empower the digital transformation of our enterprise customers. This acquisition brings geographical complementarity to our enterprise play in the CPaaS offerings. For instance, with our Tata Communications DIGO, we are strong in APAC, Kaleyra is strong in U.S., and we both have good traction in India, with not much enterprise customer overlap. With our own enterprise play, recently integrated The Switch and now with Kaleyra U.S. operations, Tata Communications is gradually strengthening its U.S. foothold. Our combined capabilities will enable us to serve an expanded customer base across geographies and scale our platform offerings globally. This will help us drive accelerated growth profitably, our ambition for our combined CPaaS offering will be to achieve an EBITDA breakeven in the near term and a double-digit EBITDA margins in the medium term. I'm excited about Kaleyra's talent, as I said before, and their demonstrated capabilities in next-gen technologies. With this acquisition, we'll further build intelligent, intuitive, and innovative multi-channel communication solutions and create a category of customer interaction platform, which has been our ambition, and unlock the new growth opportunities that lie ahead of us. Thank you. Thank you, Lakshmi. We will now open the forum for Q&A. We will wait for a minute for the queue to assemble. The first question is from the line of Sanjesh Jain from ICICI Securities. Sanjesh, you have now been unmuted. You may go ahead and ask your question after muting yourself. Hello? Hi, Sanjesh, you may go ahead now. Sanjesh, you are not audible. Are you still on mute? We can take the next. Why don't we take the next question, yes. The next question is from the line of Riddhesh Gandhi. Riddhesh, you have been requested to unmute. You may unmute yourself and go ahead and ask your question. Hi, actually, I understand, this is obviously a loss-making entity. I just want to understand the actually, you know, the synergies and the path to profitability, and the confidence we have with regards to achieving profitability and the roughly timelines on this. Hi, Riddhesh. Now, as I said, firstly, we look at the market opportunity. The entire CPaaS is a fast-growing market, and within CPaaS, you know, beyond SMS, the market is growing in non-SMS channels like voice and other means of communication. The market is growing, and that is one, a major reason. The second is obviously, this platform is in terms of proven, in terms of scale and the customer base, as you said, complementarity on geographies, and aligns with our ambition to move and position in the customer interaction platform. Yes, this entity today is loss-making, but given the scale and the complementarities and the synergies available, we are quite confident that we can make it EBITDA positive in the near term, as I said, and to a double-digit EBITDA in the medium term. Got it. We expect the profitability to be driven by synergies on the cost side, or it's just the revenue is growing, which actually in turn increases the operating and leverage in the business, just want to understand? Sorry, Riddhesh, can you repeat that question? Sure. I'm saying that the profitability will be driven by effectively synergies, which we can drive on the, you know, the cost side of things, or it's, like, effectively the revenue actually growth, which is going to kind of lead to operating and leverage, and then increase in the profitability? It will be both. You know, as the market grows, then we obviously will need to grow, and there are so much of growth potential, which is one. The second is there are other levers available, in terms of synergies, right? From the buying synergies to the other infrastructure and other synergies that we can realise that will, which will help us to deliver the margin. Right. I understand. Just the last question is that as we had outlined in the Investor Day, the aspirations and the revenue targets of ours, I'm assuming, those are, like, organic and, you know, anything inorganic will be actually incremental over and above that, or would we be considering this in the aspirations as well? I think I mentioned, during the Q&A at that time itself, when we put that aspiration up, you know, that aspiration, obviously, you know, as, and we also mentioned that we are developing a set of pipeline for M&A, but we are not going to be acquiring to hit the aspiration revenue numbers. Yeah. Right? So it is not. Therefore, I can't say, you know, both of them go hand in hand, and I think Kabir, in his presentation, called out the rationale and the logic that we would use to how we would go about doing this. As you saw in the case of The Switch, where we showed there are complementarities available because of the market and the products and everything else. Similarly, here, there are a lot of complementarities available, and the strategic rationale is quite strong, and that is the reason why, what we do. Got it. Okay, thanks. I'll just rejoin the queue. Thank you. Thank you. Thanks, Riddhesh. The next question is from the line of Mr. Nishit. Nishit, you have been unmuted. You may go ahead and ask your question. Hi, can you hear me? Yeah, you are audible. Great. Firstly, the team looks like a really, really good acquisition to me, and many congratulations to the team. ... very, very excited for this. Secondly, I just wanted to understand, this is my understanding of the space, and just would love to get your thoughts on it. I see most of Kaleyra's clients right now seem to be large enterprises, right? They do not... It seems like there is a big opportunity on the ILD side of it, right? Wherein, you know, you have so many countries where you are, you have a proven platform, and Tata Comm has the relationship with some of those very, very large customers, which are very big ILD customers out there in multiple countries. Is that a big opportunity which can come with you guys, for you guys? Yeah, Nishit, I don't particularly know what you mean by the ILD customers and presence, but largely, yes, as I said, there is complementarity from their focus on large enterprises and as is ours, right? That is, you know, we are all addressing the similar segment of market. Second is they also have a large global play, but shall I say, more focused around the US, and they have good interconnects in the US, focus, obviously, in India and Italy market. From a market complementarity perspective, Tata Comm has a much broader footprint in terms of the markets, right? Both in terms of our infrastructure and buying capabilities, as well as our presence, for example, in APAC and in broader Europe, even beyond Italy and so on. Those complementarities will definitely help us to drive the synergies, both in terms of go-to-market as well as, you know, the synergies in the infrastructure footprint, as well as the buying relationships that we can leverage each other from. Correct. Lakshmi, what I meant by the ILD market was some of the very large hyper-scalers, like, you know, Amazon, Meta, Google, and which have multi-country operations and which, you know, which are very, very large accounts and which, you know, which prefer to work with a stable platform across countries, right? Right, right. There both Kaleyra and you seem to have the tie-ups with the telcos, right? Somehow they, I didn't see them as very large customers. You know, that's where I thought there was a very big opportunity, because given Tata Comm's, given that the sector is going through... This sector has, there is a big, trust is a very important factor, and Tata brings in a lot of trust in that sector. Yeah. Is that, is that a big opportunity, was the question. It looked like. Yeah ... you have very, very strong enterprises as customer, which is very difficult to build, which is, again, a very, very good complementarity that, as you were talking about. That was the opportunity I was talking about. I think, sure. I think, some of the big OTT-like players and hyperscalers are our customers, and there is an opportunity there. I think that a opportunity, I think they are also present in certain accounts of that nature, and we are present in more number of accounts, if you will, and that certainly presents as an opportunity. The way I would see that is akin to our core connectivity portfolio, where these are very large customers having a buying power similar to a large player, and we can get bulk. Yeah. That may not be at the level of margins that we might get from other enterprise customers. Yeah, certainly, I think that is an opportunity that we will work on. Broader than that, you know, the other enterprise segments, like the banks, large retailers, the digital commerce companies, who are big users of messaging and now moving to more of omni-channels. Those who want to, you know, not to have a fragmented buying experience of SMS and voice and trying to integrate, whereas, you know, even in our case, the DIGO, the vision was to offer a more converged solution, a more omni-channel solution. Therefore, there's a lot of synergy, both in terms of vision, roadmap, and capabilities, and that presents us a great opportunity. That's amazing. Now, Lakshmi, you get a 640 member team along with it. Is it fair to assume that, you know, a lot of those people have agreed to carry on out there, and also the team, by building DIGO also, you would have a very large team inside. Again, will the roadmap will now be led by Kaleyra, being the specialist out there, or it will be jointly driven out there? No, we'll work through those initiatives. We have just announced it, and, you know, it will take time to close the deal. Only after that we can really enter into those conversations more meaningfully. We do have a vision, we do have a roadmap, but it's too soon to talk about. Which is fair. One last thing, is it also, you know, is it right in me to understand, you know, right now, Kaleyra was just selling one particular product, right? With, so the salespeople of Kaleyra can now sell a full suite of services to the entire, all the relationships that they have, in both Europe and US. Is that a fair way to also think about it? No, Kaleyra, you know, not just SMS, they already have capabilities on multiple channels, right? In terms of video, in terms of voice and other channels. They have that capability in the product that they have. Yeah, I think once we consummate the transaction, I think our ability now to take it to a broader enterprise segment, where we have presence in large customer base, and have more holistic conversation in helping them to improve their customer interactions or consumer interactions will definitely improve. This is very helpful, and all the best with the integration, Lakshmi, I think. Thank you. Thanks, Nishit. I'm unmuting, Sanjesh. Sanjesh, you may now go ahead and ask a question. Post approval, you can unmute. You are unmuted now, Sanjesh. Please go ahead and ask your question. We can hear you, Sanjesh. Please go ahead. Sanjesh, you're breaking up. Sanjesh- Sanjesh, you're breaking up. Sanjesh, you're breaking up. The next question is from the line of Mr. Mayank Babla. Mayank, you have now been unmuted. Please go ahead and ask your question. Hello. Yeah, Mayank, you're audible now. Please go ahead. Yeah. Thank you for taking my question. My question is around the debt. The net debt of the company is around $150 million, and an EBITDA of around $18 million to $19 million. What made the deal so attractive? Is it the clientele or the uniqueness in the platform? What made it so attractive to go for this deal? Yeah, Mayank, I think I've outlined the opportunities and the rationale. Essentially, the market opportunity where CPaaS as a market is growing fast. We have an opportunity to strike now with a player who's got scale in multiple geographies. While we have strengths in India and presence in other markets, they already have a reasonable scale in markets like US, and to get to that level of scale organically for us will take time. It brings, therefore, certain market strengths, a readymade market strengths besides the platform that is there. Third is, there is a vision to build out the higher order of capabilities in terms of more intelligence into CPaaS. That is an aligned vision that together we can unlock greater synergies. The point on net debt is noted, and that's where the enterprise value what we called out is included in the net debt, taking that into account. What will be the plan when we get on the board? Kabir, do you want to take that question? Yeah. We will assume the debt of the target upon close. You know, what will happen, you know, whether the bondholders would like to continue, would like to exercise, you know, any rights that come from as a result of the offer document is up to the bond. I can't speculate on that. Sure. Yeah. Thank you. Thanks, Mayank. Sanjesh, the next question is from your line. You may go ahead and ask your question, please. Thank you. Sanjesh, you know, we can't. You're breaking up. You know, perhaps if you can send your query online, and see if I can respond looking at the query, Sanjesh, that will help, because you're breaking up. Is there any learning for us, or we wanted to plug certain products, profiles on the DIGO? Can you hear me? Yeah. We're not able to hear you. You're breaking up quite badly. I would suggest, Sanjesh, if you can, if you can message the question online, we'll try to read it and respond to that, if you're able to hear us properly. I think he's probably not even able to hear us. He's just continuing with the questions, which is not coming through. Why don't we move to the next question then? The next question is from Santosh Sinha. Santosh, you may go ahead and ask the question. You have been requested to unmute. ... Impact is expected on the overall margin of the company, because, the guidance was somewhere around 23% to 25% for EBITDA margin of Tata Communications. W hat will be the impact overall, and will this overall target of 25% change? I can answer that. Firstly, I think I'll be tired of repeating myself. It is not a guidance, and it is not a target. We've always said that 23-25 is our long-term ambition for the, you know, margin profile of Tata Communications. We stick to the 23-25. As a result of this acquisition, when we do the post-close, I'm sure you can do the mathematics. This business is EBITDA negative, you know, as we speak, with $109 million of top line. It will have, of course, a dilutive impact on the Tata Communications, you know, EBITDA performance. That, we believe, is going to be a short-term, you know, hit, and we intend to have this business in the near term get into EBITDA breakeven. In the medium term, short to medium term, this should get into double-digit EBITDA growth. We can then get back to our long-term ambition of 23% to 25%, which we continue to maintain. We will, as we mentioned in the Investor Day, I will repeat, we don't mind departing from this 23% to 25% range, for good reasons and for a short-term period. This is definitely one of the strategic, you know, rational, you know, driven acquisition, for which it warrants us to depart from it for a short-term period. That's helpful. Next question is regarding this, approvals, actually. How much time you think that it will take, and what will be the key approvals that will be required? Will the entity be delisted from the stock exchanges? I will start off, and then maybe I can ask Sri to Troy. Troy is also there on the call, our Chief Legal Officer. Troy, if you can just unmute. Have Troy answer this question. This is. Okay. Can you hear me now? Apologies. This is a U.S. public acquisition, and they will, it is also a take-private acquisition such that at closing, they will no longer be listed. Yeah. Thank you. Thanks for the clarification. Was there another part of the question I didn't hear? about approvals. The approvals, there are a number of approvals, most importantly, the shareholder approval. There are also certain, competition authority approvals that will be required, along with, CFIUS, which is the Committee on Foreign Investment in the United States. Those are some of the major approvals. We expect it to be a 6-9-month approval process. Oh, thank you. Thanks a lot. Thanks, Troy. The next question is from the line of Mr. Dipesh Mehta. Dipesh, you have been requested to unmute. Please unmute and go ahead and ask your question. Sorry, we can't hear the question in this room. Can you repeat it? No, he's not. He's still muted, I think. Yeah. Ask Dipesh to unmute himself. Dipesh, please unmute yourself and ask your question. Get some sense about the product mix of the business which we acquired. Dipesh, we missed you from the starting. Could you please restate your question from the beginning? Dipesh,.. am I audible? Yeah, Dipesh, please go ahead and ask your question. I just want to get a sense about the product mix. You said about the company as omni-channel kind of platform. If you can just provide some sense about how the product mix is currently, and with the synergy benefit, how do you expect it to evolve over the next 3-5 years? Yeah, Dipesh, I mean, we'll have to see what is their publicly stated information, as they are listed. We probably can't divulge more than what they are divulging in terms of the mix and so on. We do have SMS and non-SMS products in their mix. In terms of the future, as I called out, the market, SMS is growing, but the non-SMS part will grow faster. With their capabilities and what we are doing ourselves, we think we can leverage on that market opportunity to grow in the market. I just want to understand, let's say from Tata Communications existing capability perspective, what portion of business would be very similar to what Kaleyra does? If you can provide some sense, and then how this will overall integrate with, both the entity and... You earlier indicated some of the synergy benefit, particularly on the bulk buy side, I understand. In addition to that, anything which where we have similarity in the operation and the competitor necessary? Yeah, I mean, we, you know, we launched our DIGO platform last year. Underneath the DIGO platform is what we call our messaging capabilities, the A2P messaging capabilities that we have, the voice capabilities, which had programmable voice elements and others. Those are the capabilities. We are a relatively new entrant. We were having international large A2P in a wholesale model, and in the enterprise segment with the launch of DIGO. From last year, we've acquired a good set of customers and growing. In terms of the capabilities, product capabilities, I would say Kaleyra is ahead because they have been in the market, it's fairly mature. Their platform carries a large, a lot more volumes and scale now, so it's a lot more proven in that sense. That's a big advantage for us. In terms of other synergies, I did call out, you know, there are buying, which you mentioned, as well as other infrastructure synergies that we can look at in terms of, you know, the SMSCs and where we, where we have the engineering to deliver these messaging capabilities. So those are the places where, you know, these will work together very well. That's the question from my side. I think first about the process, I missed the answer, what you gave about the transaction process. How you expect it to play out? Last is about the DIGO platform, which we referred. Is largely we have currently presence in India or we have presence outside India also, in organically? Yeah, organically, we have presence in India, we have presence in APAC market. As I said, we launched last year, these are the two places where we have acquired significant amount of customers. In Europe and US, we have opportunities that we are pursuing because this was a recently launched product in those markets, so that is where. In terms of process, I am not sure what you are alluding to. We announced the acquisition today. We called out that it will take six to nine months to receive all approvals and consummate the transaction. Understood. Thank you. Thanks, Dipesh. The next question is from Mr. Mihir Manohar. Mihir, we request you to unmute you. You may go ahead and ask your question. Mihir, please go ahead and ask the question. Hello. Yeah, am I audible? Yes, Mihir. Yeah, sure. Yeah, thanks for giving the opportunity. Sir, largely wanted to understand on the margins part piece. I mean, you looked at a breakeven kind of an EBITDA number in the near term, and double-digit kind of an number in the medium term. If you can throw some more light on the cost part of the piece, I don't know what kind of synergies are you looking specifically on the cost part? That will be really helpful. Yeah, that was the question. It's a little premature to, you know, for us to get into every detail of the cost. It's end of the day, it's a listed company, and the due diligence process only allows so much, you know, insight for us to be able to understand their cost profile. We do believe that since we are also on the journey with DIGO to invest, you know, in there, and Kaleyra has a very well-established platform, just Lakshmi mentioned, they carry a lot more volume, you know, on their platform than us, so it's very well established. We do believe that there are certain investments that we would have otherwise done to develop, you know, DIGO may not, you know, be required and we could leverage, you know, Kaleyra's capabilities. Now all of that is something, as we close the transaction, is when we will probably get insight to in a lot more detail, and it will become clearer. We have made certain assumptions in the business case on the basis of which, you know, it made financial sense for us to go ahead with the acquisition. I don't have any more that I can give you other than that. Sure, sure. Just one more question was there on the valuation part of the piece, $100 million valuation. Just wanted to understand the rationale behind it. Well, it's a good value for both Tata Communications and Kaleyra, you know, shareholders. I can't say anything more than that, which is there in the public domain already, to what the share price was trading and what the enterprise value is. This is, if I look at a 30-day, you know, VWAP, it's a 25% premium on enterprise value. If I look at last closing price, it's a 17% premium on enterprise value. There are multiple data points. It all depends on how you actually skim it. We look at from enterprise value, and these are the two data points that I can give you. It's a point 0.8x, you know, EV to sales multiple that we have actually, you know, offered to Kaleyra, which we believe is great value, and both of the shareholders, have a win-win in here, out here. That's it from my side. Best wishes for the transaction. Yeah, thank you. Thank you very much. Thank you, Mihir. Thanks, Kabir. We have a couple of online questions to address. The first question is from the line of Mr. Avnish Tiwari from Eastwish Capital. Avnish has asked: Kaleyra had a minus $15 million EBITDA in CY 2022, but adjusted for stock-based compensation and one-off costs, it was plus $19 million in CY 2022. Are you using the $15 million negative as EBITDA base while aspiring for EBITDA break-even in the near term? How will these stock-based compensations and one-off costs move? Yes, we are taking the 15 million as our base, Avnish. The stock-based compensation, you know, is something which is WIP. Is something which needs to be discussed both internally, you know, our HR teams upon close to decide what we will, you know, offer at that point in time. We need to offer a competitive overall compensation package, you know, for the Kaleyra employees to, you know, remain engaged, that is something which is work in progress. Thanks, Kabir. The next question is from Sir Anmol Grover. Kaleyra's CY 2022 P&L showed a $50 million impairment. How much of these write-downs are still to come through, and what are these related to exactly? How do you plan to reduce the debt of the company? There's one follow-up question, which you can address after this. These are related to their older acquisitions that they have done in the past. I think it is notably, you know, from mGage. I don't have any color on going forward. I'm sorry, I'll not be able to give you a forward view on it. Thanks, Kabir. The follow-up question is on the EBITDA margins, that we plan to break even in the near term and increase to double-digit margins in the medium term. Could you quantify what do you mean by the near term and the medium term? Well, near term is near term, and medium term is medium term. If I could have quantified that, then I probably wouldn't have used the words near term and medium term in the first place. Thanks, Kabir. The next question is from Sanjesh. He's typed his questions and sent across. What is the difference between DIGO and the target company? What is the contribution of the SMS and the WhatsApp business? What is the difference? DIGO and the target company offerings. What is the contribution of the SMS and WhatsApp business to the product portfolio? From the offerings perspective, as I mentioned, at A2P messaging, WhatsApp, Voice, and all of those are similar. The difference being that while we have launched our product and beginning to acquire customers in the early stages of some of these areas which are non-bulk A2P. Kaleyra has a platform that is already proven and has scale and volume that it manages, so that would be the difference. The in terms of the second question of WhatsApp. The contribution of SMS and WhatsApp business to the revenue line. As I said, I know, I don't think I can give the color on that, you know, as for them as to what their mix is. While we have some information, but I don't think I will be able to give that color of SMS and WhatsApp for them at this stage, yeah. Thanks, Lakshmi. A follow-up question from Sanjesh. PA gross profit margin is 25% to 50%. How is Tata Comm planning to bridge the gap? Are the synergies possible, as Tata Comm has strong relations with global operators? Mm-hmm. Gross margin. Yeah, gross profit margins. Yeah, I think the our model and what we are looking to is at the gross margin levels, you know, we should become much, much better as we get and leverage the buying capabilities of both the companies. Also as we increase the non-SMS part of the mix, right? Whether it's the voice or other channels, that mix will definitely improve the margins better. Those are the levers available. Obviously, below the NR line, there are other levers available to deliver the EBITDA margins, the double-digit EBITDA margins that we have called out in the medium term. Thanks, Lakshmi. This brings us to the end of the call today. May I request Lakshmi for his closing comments? Thank you, all. Thank you for joining this at a short notice. We are very, very thrilled about this transaction. This presents a major opportunity for us to establish the, a customer interaction platform meaningfully in a very fast-growing market, not just in India, but other meaningful geographies like the US, APAC, and Europe. So with that excitement, I will sign off for now. Thank you. Thanks, Lakshmi. Thanks, everyone. A recording of this call will be available on our website in the next 24 hours. You may refer to the same. Thank you so much. Any other questions may be wrote, written down to investorrelations@tatacommunications.com. Thank you. You may disconnect now.