Share of Tech Mahindra surged as much as 5% on the BSE on Friday as the company announced expansion of its strategic collaboration with AT&T to accelerate AT&T’s IT network application, shared systems modernization and movement to the cloud. Tech Mahindra will assume management of the applications that support AT&T’s network and shared systems. At 12:30 pm, the stock was trading up 3.56% at ₹720.10 on the BSE. The stock is the top gainer on both the NSE and the BSE. In early trade, the stock was trading at ₹728, up 4.68%, on the NSE. “The multi-year agreement will enable AT&T to focus on core objectives, including having the most advanced software defined 56 network, and migrate the majority of its non-network workloads to the public cloud by 2024. This comprehensive program will help drive sustainable operational improvement across the network and software development domains,” the company said in a regulatory filing on Thursday. Tech Mahindra shares gained almost 9% in August. While the deal size is not known, it is said to be one of the largest deals in the last few years, and among the five deals that the management had suggested as part of the company’s pipeline in its Q1FY20 commentary. “The company suggests that while the rebadging costs will be minimal compared with the size of the deal, it may incur significant transition costs in the near term. This will support in lifting revenue growth in the Communications vertical (already recovering in recent quarters, with us penciling in an estimated 7% dollar revenue growth in FY20 for communications),” Emkay Global said in its report. “We see this deal as providing further confidence to the recovery that the Street (including us) is building on the communications vertical ( estimated 40% of revenues), although the overall revenue growth trajectory remains unchanged due to a sharp moderation in the enterprise segment through recent quarters,” the report added. The fifth-largest software exporter reported a tepid 7% rise in net income to ₹959.3 crore in the June quarter. Revenue grew by a slower 4.55% to ₹8,653 crore on an annual basis, but fell 2.69% sequentially.
