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DSL/vectoring/G.fast

Comstar Ends Capex Blowout

2:10 PM -- It's becoming a familiar tale: Carrier announces reduced spending in 2009 as economic conditions start to hurt. This time it's Russia's Comstar United Telesystems JSC (London: CMST) that's tightening its purse strings.

Now, we already knew Comstar, which owns fixed-line services player MGTS, was preparing a capital expenditure (capex) reduction for this year -- what we didn't know previously was by how much. Now we do. And it's a big drop. (See More Russian Capex Cuts.)

Announcing its full year 2008 financial results today, Comstar noted that it had splashed out big time in 2008 on a major upgrade of its broadband access capabilities, taking the top-end downstream speeds to 24 Mbit/s, and the build-out of a WiMax network in Moscow. As a result of that investment, Comstar's cash capex in 2008 was $354 million, or 21.5 percent of its total revenues of nearly $1.65 billion. (See Russian Into WiMax.)

The investment paid off: Comstar's broadband subscriber base grew by 20 percent last year to 925,000, of which 784,000 are in Moscow. Analysts expect broadband, and associated services such as IPTV, to be the main driver of Russian telecom service revenue growth in the next five years. (See DSL Drives Russia's Fixed-Line Growth and IPTV Launches in Moscow.)

There will be far fewer network equipment purchase orders being signed off this year, though. While Comstar didn't provide a forecast for its 2009 revenues, it said it intends to keep capex levels to about 6 percent of group revenues -- way below the 2008 level.

— Ray Le Maistre, International News Editor, Light Reading

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