SIFY Reports US GAAP Results for the Third Quarter Ended 31st December 2005; Sify Reports Revenue Growth of 27% Year-over-Year to $26.7 Million, EBITDA Doubles to $ 2.25 Million

Performance Highlights:

-- Sify reported revenues of $26.7 million for the third quarter, 27% higher than in the same quarter ended 31st December 2004. The sequential growth in revenues over the previous quarter was 2.5%. Revenues from services grew by 6.4% on a sequential basis.

-- Sify's cash profit, in adjusted EBITDA terms, for the quarter was $2.25 million compared to $1.21 million in the second quarter of 2005. See below for a reconciliation of Adjusted EBITDA to our U.S. GAAP operating results.

-- Sify's net loss for the quarter under U.S. GAAP was $0.23 million, compared to a net loss of $2.11 million for the third quarter in the previous financial year.

-- Sify ended the quarter with a cash balance of $25.5 million after Capex of $ 3.1 million during the quarter. This excludes the approximately $37.5 million of net proceeds received in January 2006 from strategic investor Infinity Capital Ventures, L.P.

Mr. R Ramaraj, Managing Director and CEO, said, "We have grownrevenues by 27% over the same quarter last year, while reducing lossessignificantly to less than one cent per share. We have been investingin the business for sustained growth leading to profitability and aremoving in the right direction. We also addressed the challenges ofsudden regulatory changes by responding in record time to ensure fullcontinuity of services for our customers."

"Post the recent strategic investment in Sify and our strongfinancial position, we plan to take our successful service deliverybusiness models global. We will to do this by leveraging ourexpertise, infrastructure and leadership position, for each of ourbusiness units, in addition to growing them in India."

Mr. Durgesh Mehta, said, "We continued to grow our revenues in theEnterprise Business Unit, and recorded 17% quarter-on-quarter growthin our portals business and 16% quarter-on-quarter growth in ourbroadband to home segment of Access Media. In addition, strategicimprovements in bandwidth purchase and utilization have contributedsignificantly to our overall performance."

Sify to realign its business units:

Sify announced its structuring into three strategic BusinessUnits, supported by the core technology group. The heads of thesebusiness units, technology group and HR will report to the CEO.

Enterprise Services: Sify's Enterprise Services will be driven byRahul Swarup who has been with Sify since 1999. Prior to joining Sify,Rahul was with Citibank for over a decade, where he was Vice Presidentand Head of Citicorp Global Technology Infrastructure (CGTI), handlingthe design and operations of voice and data systems for India,Bangladesh, Sri Lanka and Nepal. Rahul has worked extensively onNetworks, Data Centers, and Telephony and Telemetry systems.

Access Media: This Business Unit comprises of the 3100 strong iWaycyber cafe chain and the broadband access to home business. This willbe headed by Shrikant P Joshi who joined Sify in December 2001, asVice President, from HEINZ where he was the Head of Sales. He was withPhilips as Head of Domestic Appliances & Personal Care Business from1996 to 2000 prior to HEINZ. Shrikant has built Sify's access businessto its current size from 2001 onwards.

Portals: Sify's portals business will be spearheaded by SuryaMantha who Joined Sify in August 2005. Surya joined Sify in August2005 as Senior Vice President - Interactive Services. His experiencespans consulting, product development and marketing. His lastassignment was with Real Networks Inc, Seattle, USA where he heldvarious senior roles with extensive experience in product managementand marketing.

Technology: Rustom Irani heads Sify's Technology initiatives asits Chief technology officer since 1999. Prior to joining Sify, Rustomwas with GE Capital International Services in Hyderabad as VicePresident - Technology and Chief Information Officer. Prior to joiningGE, Rustom was a Vice President in the Technology operations ofCitibank.

George Zacharias, President and Chief Operating Officer, hasexpressed his intention to pursue a career opportunity outside Sify.The Board of Directors appreciates George's contribution over theyears, and has accepted his resignation with his term with Sify ending30th January 2006.
Summarised Results:
(In $ million, all translated at $1 = Rs. 44.95)



Description Quarter ended Quarter ended Year ended
31-Dec 30-Sep 31-Mar
--------------- ------------- -----------
2005 2004 2005 2005
------- ------- ------------- -----------

Enterprise services 14.34 11.69 14.20 45.02
Access Media 10.31 8.40 10.16 31.26
Portals 1.07 0.59 0.91 2.29
Others 1.02 0.36 0.83 1.83
------- ------- ------------- -----------
Sales revenue 26.74 21.04 26.09 80.39

Cost of Revenues (13.87) (11.77) (14.68) (45.03)
Selling, general and admin
expenses (10.72) (8.12) (10.52) (31.56)
EBITDA share of affiliates 0.24 0.58 0.59 1.84
Other Expenses incl forex
gain (loss) (0.13) (0.67) (0.28) (0.62)
------- ------- ------------- -----------
Adjusted EBITDA (1) 2.25 1.05 1.21 5.02

Reconciliation items:
Depreciation & amortization (2.55) (3.24) (2.57) (12.62)
Below EBITDA share for
Affiliates (0.10) (0.19) (0.17) (0.71)
Profit - business / assets
sold 0.00 0.00 0.00 0.35
Net interest 0.17 0.27 0.17 1.13
------- ------- ------------- -----------
Net income / (loss) (0.23) (2.11) (1.37) (6.84)

Adjusted EBITDA (1) / loss $
/ADR 0.06 0.03 0.03 0.14
Net Income / (loss) $/ ADR (0.01) (0.06) (0.04) (0.19)


(1) Adjusted EBITDA represents net income (loss) before interest,
income tax, depreciation and amortization, impairment of
intangible assets, and results involving discontinued operations
or non-operating assets. Please see "Non-GAAP Financial
Information" below.

Note: the company reports the summarized results for every Quarter
based on the exchange rates prevailing on the last day of the Quarter
under review. The results presented above reflect results in Indian
Rupees translated at $1= Rs 44.95 At the end of the last Quarter the
rate at which the Rupee results were translated was $1= Rs 43.94

Enterprise Services:

New Business wins:

Prestigious Grid Computing Network order: Our Enterprise SolutionsBusiness won an order for setting up 'Garuda'- a Nation Wide HighSpeed Grid Computing Initiative. This will connect the country'sprestigious scientific institutes, premier educational Institutes anduniversities with a high speed MPLS network across the country. Thisis the first major win achieved in partnership with Power GridCorporation of India Limited (PGCIL), which has an extensive fibernetwork in the country on its power grid.

IP VPN customer wins: Several key customers were added includingorders for VPNs from Astra Zeneca, Eureka Forbes, ICICI Bank, Kuonitravels, LG, Nicholas Piramal, Pepsi, Resil Chemicals, Samsung India,Take Solutions, VIP Industries, and XIM Information Services, amongstothers. New customer wins from international alliances partnersinclude large orders from Alcatel and Zensar.

Hosting services: continued to grow with more customers seriouslylooking at building outsourced disaster recovery centers in additionto looking at core data center outsourcing. Significant wins includedorders from Blue Star, GSK, JM Morgan Stanley and Travel House.

Application services: Key wins include Bonanza PortfolioManagement, Radico Khaitan, New Holland and Kent Reliance. Significantwins in the Document Management Services area included Bajaj Allianz,Life Insurance, and India Bulls. New wins for Online Testing wereBirla Sun Life and Tata Power.

SifyAssure, the Information Assurance and Consultancy: arm ofSify's Enterprise Solutions, won a repeat order for a detailed riskassessment from one of its large clients in the Middle East. Thisorder is after a high level risk assessment done earlier for the sameclient. In addition to this, SifyAssure won orders for a Core BankingApplication Audit and Security Governance Audit amongst othersignificant wins. Domestic wins included a security audit for NationalHousing Bank, a large telecom carrier in India and a BS7799 audit forICICI Bank.

SafeScrypt: consolidated its position in the Insurance Sector andadded LIC of India and HDFC Standard Life to its existing portfolio ofInsurance Clients. We continue to add customers in the E-Governanceand PSU sector - the division added on DGSnD (Directorate General ofSupplies and Distribution, Government of India) and ConCor (ContainerCorporation of India) as clients while ONGC, IFFCO and NorthernRailway went live with their E-procurement Applications. ABN Amro Banksuccessfully migrated their Secure Statements Solution to our nextversion.

Forum: won its first overseas order with a leading global oil andlubricants multinational for integrating their distribution operationsacross 7 South East Asian countries.

Global recognition for Sify's Remote IT Infrastructure ManagementServices: has been recognized by Forrester for its special strengthsin remote offshore based management of IT infrastructure. Sify hasbeen featured in The Forrester Wave(TM): Global DeliveryInfrastructure Management, Q4 2005.

Access Media:

Highlights of the Third Quarter:

iWay Cyber-cafe Growth: The iWay chain increased to 3,100 of which34 are owned by Sify and the rest franchised, with the service beingextended to 149 cities and towns.

Online games at iWays and Sify Gamedromes: have displayed stronggrowth of approximately 50% from the previous quarter. In addition tomore than a 1,000 iWays, games are also available in more than 200Sify Gamedromes across the country.

Railway Bookings@ iWays: was launched to enable e ticketing forthe common man.

Internet Telephony Growth: Usage grew by about 30% over theprevious quarter, with strong revenue growths witnessed in usage bythe ITES segment.

Sify Broadband Growth: Subscribers to Sify's high speed /broadband Internet access to homes grew to around 150,000 with theservice expanded to 83 cities.

Portals:

Revenues: grew approximately 17% on a sequential basis and 82%from the same quarter of last year, driven by advertisement andsponsorship revenues. This was spurred by a rich array of broadbandcontent.

Sifymax.in (http://www.sifymax.in): A key thrust area in theportals business, SifyMax is the exclusive broadband partner forIndian Idol 2- the most popular reality TV show in India.SifyMax willhave complete show archives, exclusive behind the scenes content,chats, videoconferences etc.

New hit TV show on SifyMax: 'Sanya' from Hungama TV was launchedwith exclusive clips, contests and mobile download of episodes.

Cricket coverage: There was a full coverage of the India versusSriLanka and the India versus- South Africa cricket series, includingvideo coverage, match highlights, video archives and audio commentary.

SifyMax's video scorecard: continues to delight cricket fans byinstant replay of catches, run outs, sixes and fours almost as soon asthey happen and are recorded on the scorecard.

New advertisers: include Idea Cellular, Auto India, Wiprotech, IBMServers, Maruti Swift, SpiceJet, Gillette, Mahindra Scorpio, IndiaResort Survey and Direct TV.

Mobile content: Sify.com's mobile service 4545 shortcode formed anew tieup with Malai Malar, a leading regional daily.

Sify Tamil rated best website: Sify.com's Tamil portal was ratedthe "best Tamil website of 2005" by noted Tamil, writer, novelist &thinker Sujatha. The rating was published in Ananda Vikatan's New Yearspecial issue titled `The Sujatha 2005 awards'. Ananda Vikatan is thelargest circulated Tamil weekly.

Cutting edge technology initiatives:

-- During the quarter, for the first time in India, a Carrier Supporting Carrier (CSC) mode MPLS VPN implementation was done for a customer linking seven cities across India. The customer sites were connected using Metro Ethernet access with a highly redundant network design.

-- In another first, Sify implemented Digital Certificate based authentication platform for a multi-location IPSEC based VPN.

-- A Clustered Distributed File System was implemented for serving up sify.com's web pages. This enables sify to update in real time the web content on all the servers instantly.

-- IPV6 Compliant version of SifyMail has been developed and released in production. This makes SifyMail amongst the first IPV6 compliant mail servers to be deployed.

Sify Communications Limited (SifyComm):

Safescrypt, a subsidiary company of Sify, has been renamed SifyCommunications with effect from 1st January 2006. Sify Communicationshas applied for an NLD/ILD license with a view to operate VPNservices. In order to comply with statutory requirements for thislicense, Sify has divested 26% of shares in Sifycomm to InfinitySatcom Universal Private Ltd., an affiliate of Sify's controllingstockholder. The shareholders of Sify have agreed to transfer its VPNbusiness to Sifycomm effective 1st January 2006. For details refer tothe 6K Filing of December 20th 2005.

About Sify Limited:

Sify is among the largest Internet, network and e-Commerceservices companies in India, offering end-to-end solutions with acomprehensive range of products delivered over a common Internetbackbone infrastructure. This Internet backbone reaches 160 cities andtowns in India. A significant part of the company's revenue is derivedfrom Corporate Services, which include corporate connectivity, networkand communications solutions, security, network management servicesand hosting. A host of blue chip customers use Sify's corporateservice offerings. Consumer services include broadband home access,dial up connectivity and the iWay cyber cafe chain across 149 citiesand towns. The company's network services, data center operations andcustomer relationship management are accredited ISO 9001:2000.

For more information about Sify, visit www.sifycorp.com.

Non-GAAP Financial Information

Our presentation of financial information above includes apresentation of Adjusted EBITDA. Adjusted EBITDA is neither an IndianGAAP measure nor a U.S. GAAP measure and should not be considered inisolation or as an alternative to net income as an indicator ofoperating performance or as an alternative to cash flow as a measureof liquidity. Our presentation above also includes a reconciliation ofAdjusted EBITDA to net income/(loss), which we believe to be the mostcomparable financial measure under U.S. GAAP. Adjusted EBITDA ispresented because it is a basis upon which our management assesses ourfinancial performance and because we believe some investors find it tobe a useful tool for measuring a company's financial performance andability to fund operating obligations and capital expenditures.Investors evaluating our financial performance or analyzing ourdiscounted cash flows based on Adjusted EBITDA should considerfinancing activities and non-recurring charges that are not includedin the calculation. Also for the fiscal year ended March 31, 2005,Adjusted EBITDA excludes a gain on sale of land held for development($ 0.35 million). While EBITDA or derivations thereof are frequentlyreported by many companies as a supplemental measure of operations, itis not necessarily comparable to other similarly titled captions ofother companies due to potential inconsistencies in the method ofcalculation.

Forward Looking Statements:

This press release contains forward-looking statements within themeaning of Section 27A of the Securities Act of 1933, as amended, andSection 21E of the Securities Exchange Act of 1934, as amended. Theforward-looking statements contained herein are subject to risks anduncertainties that could cause actual results to differ materiallyfrom those reflected in the forward-looking statements. Sifyundertakes no duty to update any forward-looking statements.

For a discussion of the risks associated with Sify's business,please see the discussion under the caption "Risks Related to OurBusiness" in the company's report on Form 6-K for the quarter endedSeptember 30, 2005 which has been filed with the United StatesSecurities and Exchange Commission and is available by accessing thedatabase maintained by the SEC at www.sec.gov.