Tech Mahindra expects good business from British Telecom: CFO

Tech Mahindra, a listed IT services vendor, expects business from British Telecom, a UK-based giant, to remain stable despite some strategic changes. Sonjoy Anand, CFO, Tech Mahindra told NDTV Profit in an interview that the exit of two directors of British Telecom (BT), a UK-based telecom company, was a natural progression.

“BT has an intention to exit the company. I cannot comment on when they will sell the stake and who they will sell it to,” Anand said.

BT holds 23.23 per cent stake in Tech Mahindra. The company accounts for 40 per cent of the business. Over the past two years, BT sold 5.5 per cent stake in the company and has an intention to exit the equity holding in Tech Mahindra. On an average, Tech Mahindra gets $ 115m worth of business from BT.

Anand said that there was an arms length between the business and commercial side of the business and that Tech Mahindra continues to remain a major vendor for BT.

Analysts expect the company to face pressure on the business growth from BT, a key customer for Tech Mahindra.

He does not see a significant business risk on the US visa issue. US has cut the allocation of work visas for Indian nationals. Anand said that the company could look at intensifying offshore services model to mitigate the low number visas. “We could also look at local recruitment in US,” Anand said.

Anand said that the company believes that opportunity exists for growth in US where AT&T, a telecom giant, has grown quickly through acquisitions and needs IT services support. He also said that Africa is a continent that the company expects to exploit opportunities. Tech Mahindra provides services to Bharti Airtel, a listed Indian company, that acquired an African telco Zain.

The company expects the pricing outlook for new contracts to remain stable and the rupee depreciation to be positive for the operating profit.

Tech Mahindra shares have slumped 20 per cent over the past six months and underperformed the broader trend in the IT sector. The BSE IT sector index fell only 5.5 per cent during the same period.