RComm sees lower capex in FY11

NEW DELHI, INDIA: Reliance Communications, India's No. 2 mobile operator, expects its capital expenditure to continue to fall having invested more than 400 billion rupees ($8.6 billion) in the past four years on network expansion, a top official said.

Group Managing Director Satish Seth told analysts on a conference call on Monday the company was planning capital expenditure of 30 billion rupees for the financial year to March 2011, which would be a third lower than this year's spending.

"We expect it to continue on a declining trend," he said, adding planned expenditure for the next financial year excluded possible investments in India's upcoming 3G and broadband wireless access spectrum auctions.

Seth said the current year's 45-billion rupee expansion plan would be fully funded through cash generated from operations.

Reliance Communications has a net debt of 188.71 billion rupees after spending heavily on building a second network to expand its smaller GSM mobile services across India.

The company on Saturday reported net profit for its fiscal third quarter ended December fell by over a fifth as sharp falls in call charges squeezed margins, but investment incomes and cost control helped stem the decline.

Shares in Reliance Communications, valued at $7.6 billion, ended 2.3 percent higher on Monday. The stock was the worst performer in 2009 among the benchmark index components.