Sify Technologies Ltd (SIFY) 2010 Q3 法說會逐字稿

Greetings, and welcome to the Sify Technologies third quarter fiscal year 2009/2010 financial results. At this time, all participants are in a listen-only mode. A 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, Christopher Chu with Grayling. Thank you, Mr. Chu. You may begin.

Thank you operator. I would like to extend a warm welcome to all of our participants on behalf of Sify Technologies Limited. I'm joined on the call today 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 the results, there will be an opportunity for questions. If you do not have a copy of our press release, please call Grayling at 646 284 9400, and we will have one sent to you. Alternatively, you may 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. Sify's release for the year are according to the International Financial Reporting Standard, or IFRS, and will differ somewhat from the GAAP announcement made in previous years.

A presentation of the most directly comparable financial measures, calculated and presented in accordance with GAAP, and a reconciliation of such non-GAAP measures and other 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'd like to point out that certain statements contained in the earnings release and on this call are forward-looking statements rather than historical facts, and they are subject to risk and uncertainties that could cause actual results to differ materially from those described.

With respect to such forward-looking statements, the Company seeks protections 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, Chris. Good morning. Thank you for joining us on the call. I will commence with opening remarks on our performance for the third quarter ending December 31, 2009.

We're happy to report continued revenue growth from our Enterprise Services from services to corporates, as well as to central and state governments.

An example is the contract is to build and manage the state data center of Tripura, the northern state of India. We expect to see more in the pipeline coming in the future.

We are in the final stages of the preparation for a unified standard for our Consumer Services, with the test launches [plotted] for near future. This was necessitated by the change in the environment in which we operate, and we believe the new strategy will benefit us with the growth in revenue going forward.

Consumer expectations and the use of Internet in the world, and the time is right to offer a platform with the multiple services for online fulfillment. This also help drive additional revenues through our three forms of interfaces with (technical difficulty) in cyber cafes, and also sify.com.

While International Services revenue reports the same as previous quarter, we have very healthy funnel, expected to grow as the international markets showing some good signs as the revenues going forward.

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

Thank you, Raju; and hello, everyone. I shall now present the highlights of our financial performance for the third quarter ending December 31, 2009.

Revenues for the quarter were $39.19 million, 18% higher than in the same quarter of the previous year, and about the same as the immediately preceding quarter.

Growth was driven by revenues from Enterprise Services, with Data Center, Managed Voice, Application Services and Systems Integration Services all registering growth. International Service revenues were the same as the previous quarter.

Consumer Service revenues were lower than the previous quarter, since the launch of new business models for cafes, and a new product line [delivering] broadband services, and overall unified approach, which will be test launched soon.

Net profit for the quarter was $9.06 million, as against a net loss of $5.54 million in the same quarter in the previous year, and a net loss of $2.53 million in the immediately preceding quarter.

Net profit for the quarter was due to a one time realization, non-recurring from legal matters and other income of $12 million during the quarter.

CapEx during the quarter was $6.21 million. We ended the quarter with a cash balance of $17.63 million.

While our focus is on growing revenues, we continue to work to reduce operating expenses through fiscal discipline and increasing operating operational efficiencies. We will ensure prudent utilization of funds available for expansion, along with capital recovery and credit lines.

We will also cut costs effectively, capitalizing on a market that is once again beginning to grow at earlier levels, by optimizing delivery process, through online applications and tools.

I will now hand over to Suri, who will take you through the business initiatives during the quarter. Suri.

Thank you, Vijay; and good morning, everyone. We continue to see growth in Enterprise Services revenues across Hosting Applications and Managed Voice Services. In addition, we are gaining traction in services to the government for data centers and applications development.

We acquired 225 new customers during the quarter, with Network Services, accounting for 107 customers. Hosting Services added 21 new customer, Application Services 48 customers, and public key infrastructure services, the SafeScrypt Service, 34 customers during the quarter.

A significant event in systems integration was the state data center of the state of Tripura. Hosting Services grew by 20% during the quarter.

New initiatives and hosting in the future will include high capacity, managed storage services in high availability mode, and managed computing services, including cloud computing.

Our International VoIP business grew 7% over the previous quarter, despite a steep fall in prices for international [denominations]. 12 new carriers signed on with Sify during the last quarter.

Application Services grew across service lines, including significant wins from the Government of [Russia], and the incumbent telco BSNL in (inaudible) for document management solutions.

A significant engagement of Sify's proprietary [foreign] supply chain management solutions were signed with Bharat Petroleum Corporation Limited, one of the last state-owned petroleum companies. And the National Institute of Management for a learning management system, as well as online assessment [courses].

New initiatives included the launch of Simplidoc, a document management solution for small businesses that was launched through our channel partners, and aimed at the small and medium business sectors.

Our Channel business grew 24% during the quarter, with 11% growth by existing channel partners. We also saw traction with various government arms for document management systems, as well as strengthening our engagement with Microsoft for messaging solutions.

Our strategy is to position Sify as the only information technology solutions partner that a company needs. The competition, primarily telcos, offers basic connectivity, or connectivity on hosting, as compared to Sify, which offers integrated, end-to-end services for all enterprise communications and collaboration needs.

The operations of Sify Technologies Singapore were launched during the quarter. This entity will serve as a point of interface with partners and vendors in Singapore.

In International Services, we added three new accounts for infrastructure managed services in the areas of insurance, [healthcare] and advertising products and services. We continue to expand our reach through partnerships with a new partner, [Capto], having signed on during the quarter.

While revenues were at the same level of the previous quarter, the sales funnel is promising and should result in growth in revenues in the future.

The eLearning Services division acquired four new accounts during the quarter across the following sectors; higher education, network and Internet technologies, pharmaceuticals, and energy. Our eLearning division also won the 2009 Brandon Hall Silver Award for Excellence in the Best Use of Mobile Learning category. This is the fourth successive year that Sify has won an award at the Brandon Hall Awards for excellence and learning.

In both Infrastructure Management Services and eLearning, our strategy is to leverage our expert (technical difficulty), based on our experience, tools and applications, [mature processes], and understanding of online delivery.

In Consumer Broadband Services, our current range of services was enhanced, with two sharply focused product launches. The first is the Mega Blast products which offer customers immense value. Customers get three months usage free when they opt for advance payment for one year, and one month free for advance payment of six months. There is also a two week free offer for a three month plan. All these campaigns are very affordable, and are aimed at locking in customers over a longer period of time to reduce churn.

The second is a platinum range of products considered for the needs of the small office/home office segment. The platinum range not only offers high speeds of [2 Mbps], the customer also gets free mail IDs, a domain name, and webhosting template services from Sify.

Our ePort cyber cafe chain has been recognized as an attractive, online distribution option for all forms of electronic fulfillment and services. Many organizations, including banks, conduct their online tests and (inaudible) ePort cafe chain.

The Center for Development of Advanced Computing [see] that also use ePorts for (technical difficulty) of online job applications during the last quarter. We're also soon test launching (technical difficulty) cyber cafes to expand reach and revenue options. (Technical difficulty) coverage, market gain, in that coverage of Copenhagen Climate Summit, coverage of the (technical difficulty) of the Commonwealth Games, etc. So online ad revenues rising 18% in the last [quarter]. In addition, Sify [Sport], Sify Weather, Sify News and Sify Astrology were made available on mobiles.

Overall on the consumer front, we are finalizing plans for a unified approach, with value-added services getting delivered across platforms from cyber cafes to home broadband users, as well as to sify.com users.

A number of applications have been identified such as utility bill payments, (inaudible) shopping, e-governance, learning and education, that will be made across all of our consumer services on a proprietary platform [of] Sify that is safe, secure and easy to use.

Various Sify platforms, including sify.com, the ePort and the broadband streams, offered a co-branded, Internet learning program from NIXI. Over 30,000 candidates have taken the program and online test so far, and have received course certificates from Sify-NIXI.

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

Thank you, Suri. I would like to reiterate our focus on driving cost effective growth in an environment that, once again, in a tough economy outlook. In pursuing the opportunities in India [story], we will make selective investment in expanding our infrastructure and service care (inaudible) in a strategic manner.

While our focus remains growth and achieving scale, we are determined to move towards the profitability as quickly as we can. Growth in Consumer Services is going to be one of our key factors, which we hope to be able to achieve during the course of this year.

I will now hand over to the operator for any questions. Operator.

Thank you. Ladies and gentlemen, we will now be conducting a question and answer session. (Operator Instructions). One moment, please, while we poll for questions. (Operator Instructions).

I'm showing we have no questions. I will now turn the floor back over to management for any 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 and thereafter.

Thank you and goodbye.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time, and we thank you for your participation.