Sify Technologies Limited Q3 FY2026 earnings call

• India's growth in tech, with strong economic fundamentals, policy continuity, and accelerating digital adoption, positions India as a central pillar in the global technology ecosystem. Sify's strategy aligns with this by investing in hyperscaler data centers, resilient networks, and AI-driven platforms.
• Financial highlights for Q3: Revenue up 11%, EBITDA up 29%, capital expenditures INR 3,452 million, cash balance INR 3,627 million.
• Data center co-location: 9.1 MW capacity sold in the quarter; total design capacity is 188 MW, with 130 MW ready for service and 127 MW sold.
• Network services: 1,214 fiber nodes (9% y-o-y increase) and 9,695 SD-WAN service points deployed.
• Digital services: Hoping to be breakeven in the latter part of FY 2026-'27, with profitability dependent on service market scaling.

Revenue for Q3 FY 2025-'26 was INR 11,596 million, an increase of 11% over the same quarter last year. EBITDA was INR 2,470 million, an increase of 29% over the same quarter last year. Loss before tax was INR 257 million and after tax INR 329 million. Capital expenditures during the quarter was INR 3,452 million and cash balance at the end of the quarter, 31st December 2025, was INR 3,627 million. The revenue split between the businesses for the quarter was Network services 37%, data center co-location services 40% and Digital services, 23%. In this quarter, data center co-location capacity of 9.1 megawatts was sold. As of December 31, 2025, Sify Network Services provides services via 1,214 fiber nodes, a 9% increase over the same quarter last year. And as at the same date, 9,695 SD-WAN service points across the country had been deployed.

• IPO of Infinit Spaces: Draft prospectus filed mid-October 2025; expecting SEBI approval this month, then updating draft with financials as of 31 Dec and proceeding with listing.
• Data center capacity: 2 facilities in Rabale to go live in the current calendar year; 2 greenfield projects under construction, one mid-year, one mid-next year, with aggregate capacity ~125 MW.
• Digital services: Aim to be breakeven in the latter part of FY 2026-'27.

Q: Update on the timing for the IPO of Infinit Spaces?

A: We filed the draft prospectus middle of October 2025. Usually in 3 to 4 months, we get securities regulators approval. We are expecting the approval of the draft prospectus this month. And we will be guided by the bankers on the exact timing of opening the issue and getting listed.

Q: Update on total design capacity and sold capacity of data center?

A: The total design capacity is 188 megawatts, out of which the capacity which is ready for service is 130 megawatts. And out of 130, the total sold capacity is about 127 megawatts.

Q: Roadmap for new data center construction?

A: There are 2 facilities in our Rabale data center campus, which will go live in this calendar year for which we have contracted with the customer. And there are other 2 greenfield projects, which are under construction. One of which will get delivered middle of this calendar year and the other will get delivered middle of the next calendar year. The aggregate capacity of all the 4 facilities at present is about 125 megawatts.

Q: When might digital services be breakeven?

A: To breakeven -- I don't want to sound forward-looking, but let me give a little guidance to the extent I can. The next fiscal year, '26-'27, latter part of the year, we should hopefully become breakeven.

Q: Revenue generating capacity sold since June 2025?

A: Out of that, the revenue generating will be about 4 megawatts because a substantial part of the orders have come in December, which will generate revenue in the coming quarter.

Q: Average contract tenure for hyperscale and enterprise?

A: For hyperscale contracts, it's all for a tenure of 7 years and with renewal for 2 further terms of a similar period and for enterprise contracts, it is 5 years and which usually tend to get renewed for similar periods.

Q: Return on capital employed per megawatt?

A: Return on capital employed, we measure it essentially for the stabilized facilities, which is facilities when they get fully populated. And for the fully populated facilities, the return on capital employed is in high teens.

Q: IPO proceeds use?

A: The IPO primary portion of it is going to go for data center expansion. A portion of the funds will go towards retiring the existing loans, and we will replace those loans with lower cost and longer-term infrastructure debt subsequently.

Q: Depreciation on power equipment?

A: In fact, we have been in business for about 25 years. And except for certain items like the UPS and the batteries, rest of them have a life north of 15 years. One of the reasons the company took a depreciation policy of an average of 8 to 10 years is to coincide with the pricing model, which the company adopts.

Q: Data center margin dip?

A: The EBITDA margins are consistent between 44% to 45%, 100 basis points difference at times arises between quarters, depending on the customers ramping up their IT power consumption. It generally fluctuates between 100 to 200 basis points. Otherwise, it's close to 45%.

Q: Network business flat?

A: As far as the Network business is concerned, during this quarter, we had some bit of price corrections for our existing customers. Second is there is also a small shift of customers moving from MPLS to Internet and when the customers move from MPLS to Internet because of the new technologies like SD-WAN and SASE, the price realization comes down.

Q: Google partnership on networking?

A: Sify as partner for Visakhapatnam cable landing station, strategic investment, customer likely funds carrying capacity. Sify Network business is a carrier-neutral cable landing station operator; Google's cable will land in a data center Sify is setting up in Visakhapatnam, with customer likely funding carrying capacity.

Q: CapEx for AI in data centers?

A: Incremental CapEx for AI is marginal, some funded by customers, liquid cooling ~$1.3M per MW, borne by customer or Sify depending on contract.

Q: Data services ramp-up?

A: We are expecting a combination of actions to help us get to breakeven. One is from our portfolio of services. We will look at focusing on 2 or 3 services more for revenue ramp-up like we have the cloud and managed services, the network managed services and the security managed services. So those are a portfolio, which we will see some revenue growth to help us get to breakeven, where we are actually developing capabilities around AI ops to bring the differentiation to the customers.

Q: Equity stability and CapEx/debt?

A: IPO to fund growth, primary capital ~INR 2,500 crores, offer for sale ~INR 1,200 crores, total issue ~INR 3,700 crores.

Q: Rabale data center projects?

A: 4 greenfield projects in Rabale, 2 brownfield, 2 greenfield, all part of same campus.

Q: AI contracts return on capital?

A: At present, we are seeing same kind of returns. Early stages, let's see how it increases in the future. But at present, it's the same set of returns.

Q: Andhra Edge facility capacity?

A: Early stages, initially designed for 5 MW, land allotment 50 acres for future.