Reliance Communications Ltd (RCom), India’s No. 2 mobile operator, expects its capital expenditure (capex) to decline starting next year, but does not see a slowing of planned initiatives despite a tougher market.
Reliance, which trails leader Bharti Airtel Ltd, had earmarked a total of Rs50,000 crore for the fiscal year ended March and the current year to expand its network, chairman Anil Ambani said on Tuesday.
Balanced: RCom had earmarked a total of Rs50,000 crore for the fiscal year ended March and the current year to expand its network. Rajeev Dabral / Mint
“Starting next year, our capex intensity is set to decline as many initiatives are at the execution stage, and we expect strong cash flows,” he said at the annual shareholders’ meeting.
The company, which earlier this year ended a bid for a tie-up with South Africa’s MTN Group Ltd, had enough funds for its expansion plans although turbulent markets had forced a delay in the planned initial public offering of its tower unit, he said.
“We don’t see any slowdown in plans we are undertaking and are well funded for them,” said Ambani, adding, slowing consumer demand was a “temporary cyclical downturn”.
RCom, which had 54.3 million subscribers at the end of August largely on the code division multiple access, or CDMA, platform, is spending about $6 billion (Rs28,140 crore) to expand its global system for mobile, GSM, network across the country. It also recently launched a direct-to-home satellite television service.
RCom had started testing GSM signals in New Delhi and Mumbai, and would move to other cities soon, Ambani said. India is the world’s fastest growing market for wireless services, ranking only behind China in size, with more than eight million new users signing up every month, attracted by cheap handsets and call rates.
Foreign telecom firms could gain access to the booming market through a global auction of five third generation, or 3G, licences this year for most of India’s 22 service zones, increasing competition.