Sify Technologies Ltd (SIFY) 2009 Q3 法說會逐字稿

Greetings and welcome to the Sify Technologies Limited results for the third quarter ending December 31, 2008 conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation.

(Operator Instructions)

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Truc Nguyen, Investor Relations for Sify. Thank you, Miss Nguyen, you now begin.

Thank you, Rob. I would like to extend a warm welcome to all our participants today on behalf of Sify Technologies Limited. I'm joined on the call by Raju Vegesna, Chairman and CEO, C.V.S. Suri, Chief Operating Officer, and M.P. Vijay Kumar, Chief Financial Officer of Sify Technologies.

Following our comments on these results, there will be an opportunity for questions. If you do not have a hard copy of our press release, please call Grayling at 646-284-9474, and we will have one sent to you. Alternatively, you can also obtain a copy of the release at the Investor Information section on the Company's corporate website at www.sifycorp.com. A replay of today's call may be accessed by dialing in on the numbers provided in the press release or by accessing the webcast in the Investor Information section of the Sify corporate website.

Some of the financial measures referred to during this call and in the earnings release may include non-GAAP measures, as these results for the year are according to International Financial Reporting Standards, or IFRS, and will just differ somewhat from the GAAP announcements made in preceding quarters. A presentation of the most directly comparable financial measures calculated and presented in accordance with GAAP and a reconciliation of such non-GAAP measures of the differences between such non-GAAP measures and the most comparable financial measures calculated and presented in accordance with GAAP will be made available on Sify's website.

Before we continue, I would like to point out that certain statements contained in the earnings release and on this conference call are forward-looking statements rather than historical facts and are subject to risk and uncertainties and could cause actual results to differ materially from those described.

With respect to such forward-looking statements, the Company seeks protection afforded by the Private Securities Litigation Reform Act of 1995. These risks include a variety of factors including competitive developments and risk factors listed from time to time in the Company's SEC reports and public releases.

Those lists are intended to identify certain principal factors that could cause actual results to differ materially from those described in the forward-looking statements, but are not intended to represent a complete list of all risks and uncertainties inherent to the Company's business. I would now like to introduce Mr. Raju Vegesna, Chairman and CEO of Sify. Raju?

Thank you, Truc. A warm welcome to all of you, and thank you for joining us today. I will commence with the opening remarks on our performance in the third quarter of this financial year. We have done well to grow the international business over the immediately previous quarter despite the challenging financial and academic climate. We grow our domestic enterprise business as well despite many companies reviewing growth plans and scaling back IT investments in the last quarter as they responded to the global financial crisis and its effects. Overall, we expect the enterprise business to continue to grow but at a reduced pace in the future.

We expanded the availability of our consumer services on the back of our network expansion during the quarter. SifyMail, the new mail services from Sify.com, was launched during the quarter and is seeing good traction. We have continued to lead with the video content, with the significant ads with the TV stations for programs and contents such as Indian Idol 4 and special section on the assembly elections in India.

We are expanding the space available for our new data centers in Mumbai to meet demand and continue to expand network to reach based on on-demand. These are challenging times, but we remain focused on cost effective growth going forward. And we are also taking enough measurements to make our operating costs very [kernel] to bring our operating cost as scalable and we are looking at our bandwidth cost, manpower cost and all the miscellaneous support functions cost. And we are also evaluating across all our businesses, some of the verticals which are not making sense, and we are hardly looking at to make it what are the things going forward kind of things.

So now I will request Mr. Vijay Kumar, our Chief Financial Officer, to take you through our financial performance for the quarter.

Thank you, Raju. And hello, everyone. I shall now go into the details of the financial performance for the quarter. Revenues for the quarter ended 31st December 2008 were $32.87 million, 4% higher than the same quarter in the previous year.

Our Enterprise business registered a growth of 13% over the same quarter in the previous year and an increase of 2% over the immediately preceding quarter. The international business grew 9% over the immediately preceding quarter, while consumer businesses were 11% lower than the previous quarter.

Net loss for the quarter under review was $5.03 million as against a net profit of $0.83 million in the same quarter in the previous year. Additional expenses incurred during the quarter were due to data center expansion and doubling of network reach over the last three quarters. For this increases current operating costs, whereas revenues take time to scale across all the new locations.

We ended the quarter with a cash balance of $1.01 million after capital expenditure of $5.31 million during the quarter. We have taken steps to ensure adequate funding for growth going forward, both in terms of debt as well as in capital recovery by scaling back on some earlier investments in facilities. These will be reflected by the end of the last quarter of this financial year.

We have also reviewed costs such as our current facilities and infrastructure, and are consolidating them to reduce overall operating costs. Some of our outsourced services have also been scaled back given the current environment. Our focus continues to be on judicious expansion and growth during these challenging times, as this will stand us in good stead when the environment improves.

I will now hand over to Suri who will take you through some of the key initiatives during the quarter. Suri?

Thank you, Vijay. And good morning to all of you. Demand for our enterprise services continues across connectivity, hosting, security and applications, but lead times for decisions are now much longer as companies examine every investment need before committing resources. Our VoIP carrier services have seen robust growth during the quarter, and we expect this business to be a growth driver going forward. Data center services are also continuing to see demand, as well as our application services.

Revenues during the quarter were from enhanced requirements and new engagements from existing clients, as well as new business across connectivity, hosting and applications. As shared with you, our international services revenue grew 9% over the immediately preceding quarter. We added on a new client in the infrastructure managed services and have a number of prospects in the tunnel and expect to further grow our revenue going forward. We also added desktop management to the range of services offered to clients under our IMS services.

Our eLearning business had a number of business wins during the quarter. Some of the significant wins were from a global conglomerate with businesses and manufacturing, energy, media and finance, a global pharma major with a presence in generics, vaccines and consumer health products; and a global leader in automotive supplies. We continued to expand our consumer presence in terms of e-port cyber cafes as well as home broadband services during the quarter. We have expanded our presence to 12 new cities across the country with 18 e-ports and 15 new broadband partners.

We also successfully converted 30 local mom and pop cyber cafes to sify e-ports with a special offer to upgrade and capitalize on the benefits of Sify Safe & Secure and Sify Value Added Services. The broadband business also launched a new portfolio of products with a range of speeds to choose from that has made the product range more versatile and more competitive. We also launched a range of multi-month product packs with a special offer. This has met with an encouraging response.

The new portfolio of e-port caf products offer higher value to the customer with up to 50% more browsing time on certain packs. We also introduced a free trial pack to give prospective customers a chance to experience the sify e-port with 15 minutes of free browsing at the cafes.

We are now offering three Microsoft certification courses; the Digital Literacy Certificate program, Windows Operating Basics and a Super Saver pack, which is a combination of the first two courses. These courses are targeted at school and college students, working professionals, housewives, as well as senior citizens.

Sify e-port customers can now send e-mail, chat and browse in their own regional language with the launch of our LooKeys service. There are ten Indian languages to choose from; Hindi, Punjabi, Bengali, Telugu, Tamil, Urdu, Malayalam, Gujarati, Marathi and Kannada. However, consumer access business remains a challenge in the current environment despite a good number of initiatives in terms of services as well as market expansion.

In our interactive portal services, the new SifyMail program has seen significant growth in registered users and strong appreciation from the users. SifyMail WIYI or World In Your Inbox is a revolutionary new email service with which users can personalize their inbox with a wide array of applications on news, finance, images and information from any source. In addition, SifyMail WIYI has a 7 GB inbox, documents, spreadsheets and calendar, and the ability to chat across multiple chat platforms. So the user's inbox can literally be their home page on the net.

Sify.com continued its association with the popular TV channel Sony Entertainment Television with tie-ups for Indian Idol 4, the immensely popular reality show. Sify also entered into an agreement with YouTube to bring exclusive videos of the event to online users on their site. Fans of Indian Idol were offered interactive tools, community features, videos, gallery, picture gallery, show recaps, message boards and opinion polls. Indian Idol tools were also made available to users on leading social networking sites.

Extensive coverage on assembly elections in India was also brought to users in association with the Star News channel. This covered personalities, their campaign trails and real time election results. Our gaming portal Antzill continued to attract 17 to 25-year olds to play games, win prizes and build a community of gamers through specific community building modules available on the site. Antzill offers the opportunity for enthusiasts to not only play, but also to win prizes and build communities of gamers amongst themselves.

This brings us to the end of this section. I will now hand over to Raju once again for his closing remarks. Raju?

Thank you, Suri. I would like to conclude by reforming our focus on cost effective growth going forward despite the challenging environment. While our enterprise business continues to grow across domestic and international businesses, we will focus on turning around consumer businesses going on what are the businesses that would make sense for the following quarters. We will also continue to make investment in expanding our infrastructure and service capabilities based on the demand of our services.

I will now hand over to operator for questions. Operator?

(Operator Instructions) Thank you. There are no questions at this time. I would like to turn the floor back over to Raju Vegesna for closing comments.

Thank you everyone for joining us on the call. We look forward to interacting with you all through the quarter and around this time thereafter. Thank you, and goodbye.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.