Sify Technologies Q2 Revenues at $ 34.40 Million

Business Wire, Oct 31, 2008

Revenues Grow 6% Sequentially, Net Operating Loss at $ 4.13 Million

CHENNAI, India -- Sify Technologies Limited (Nasdaq National Markets: SIFY), a leader in Consumer Internet and Enterprise Services in India with global delivery capabilities, announced today its consolidated results under the International Financial Reporting Standards (IFRS) for the second quarter ended 30th September 2008.

Performance Highlights Q2 2008-09

* Sify reported revenues of $ 34.40 million for the quarter ended 30th September 2008, 9 % higher than the same quarter in the previous year, and 6% higher than the immediately preceding quarter.

* The Enterprise business registered growth at 13% over the previous quarter, while the consumer business' revenues were 7% lower than the previous quarter. The challenging global financial and economic climate resulted in the international business ending the quarter with revenues at the same level as the previous quarter.

* Net operating loss for the quarter was $ 4.13 million compared to a net operating profit of $ 0.49 million in the same quarter in the previous year. Net loss including exceptional items was $ 5.65 million.

* Exceptional items during the quarter amounted $ 1.52 million on account of legal fees.

* Additional expenses incurred during the quarter were on account of data centre expansion and the doubling of network reach over the last three quarters. This also increases current operating costs, whereas revenues will take time to scale across all the newly established locations.

* Sify ended the quarter with a cash balance of $ 5.12 million after capital expenditures of $ 6.73 million during the quarter.

Mr. Raju Vegesna, Board Chairman and CEO & MD, Sify Technologies, said, "Our enterprise services grew strongly during the quarter, and we expect to continue to grow this business in the coming quarters despite the expected slowing down of the Indian economy to 6 to 7 percent growth going forwards. During the quarter we completed and launched our new data centre at Mumbai, and installed Cisco CRS 1 routers in our network core taking us towards Next Generation Network capabilities. We also grew our network reach to 524 cities during the quarter, making our infrastructure one of the largest and most sophisticated of its kind in India. Network expansion also enables us to widen the reach of our consumer services to more cities in India."

Mr CVS Suri, Chief Operating Officer, Sify, said, "Demand for our enterprise services continue across connectivity, hosting, security and applications. We launched our VoIP carrier services for the back haul of voice traffic over our network for telecom companies during the quarter. New initiatives focused on the SMB segment, as well as the launch of our Software-as-a-Service in the current quarter will add additional new revenue streams going forwards. We have launched our new email service in alliance with Google on our portal, and expect to gain traction on this and other new initiatives in the coming quarters. A new interactive gaming site called Antzill on Sify.com was launched with an array of games for online gaming enthusiasts during the quarter. While we continue to rationalize our cafes in the current environment, the new name and identity are under execution, to be followed by the promotion of the cafes as fulfillment centres for all manner of online services in addition to Internet access. The results of these efforts will be felt by the end of this financial year."

Mr. MP Vijay Kumar, Sify CFO, said, "Expansion to attain critical mass is key to gaining a competitive edge in the still developing Indian market for our services. Our timely investment in network expansion and in data centres will enable us to scale our business going forwards. The current environment also throws up opportunities for infrastructure and data centre expansion at very competitive costs. Investment decisions will be taken to ensure the company benefits from existing opportunities for growth in revenues or capabilities for competitive advantage. The financial markets are, however, affected by the ongoing global financial crisis, which will affect the rate of growth of the economy and make access to capital increasingly a challenge in the current environment."

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Highlights of the businesses:

Sify Enterprise:

* Enterprise services revenues grew 13% over those of the previous quarter.

* New engagements for connectivity services were signed with Glenmark Generics Limited, Punj Llyod, Sparsh BPO Services, Trilegal and Ultratech Cements.

* Repeat business from existing clients include Emerson Group, HDFC Standard life insurance, ICICI Bank, IDBRT and Vodafone.

* Significant hosting contracts were signed with Lodha Group and Trilegal.

* Hosting contracts for additional services from existing clients include Crompton Greaves, HDFC Standard Life Insurance, Shoppers Stop, Shriram Group and VFS Group.

* VoIP carrier services for the back haul of voice traffic over our network for International Long Distance voice traffic were launched on July '15th,2008. Pan India termination was offered to carriers right from the beginning of services. Our participation at global telecom conferences such as ITW & PTC created a strong awareness of the Sify brand, enabling us to interconnect with many Tier 1 operators and Mobile Virtual Network Operator's like Singtel, I basis and Stratec.