More Russian Capex Cuts

9:20 AM -- Comstar United Telesystems JSC (London: CMST) has joined fellow Russian carrier VimpelCom Ltd. (NYSE: VIP) in reducing its near-term spending plans to conserve cash. (See Capex Watch: VimpelCom Cuts Back.)

Announcing its third-quarter results late last week, Comstar, which provides voice and data services in Moscow and scores of other Russian cities, stated:

We are reprioritizing our capital expenditure plans in light of the current market conditions and postponing less urgent projects to later in 2009 and beyond. We have already reduced our projected 2008 capital expenditure to approximately $360 million, which is well below the level originally anticipated, and we will also not exceed this level in 2009. As before, we expect to finance these investments from our existing funds and facilities.

Comstar, which has 922,000 broadband customers around Russia, including 793,000 in Moscow, generated net income of $120 million from revenues of $1.26 billion in the first nine months of 2008 and has net debts totaling $326 million. The majority of its revenues come from traditional voice services to residential and corporate users. (See Comstar Reports Q3.)

And it's not just Comstar and Vimpelcom examining their outgoings in Russia: Mobile TeleSystems OJSC (MTS) (NYSE: MBT), which is in the midst of its 3G rollout, recently reduced its capex plans for the full year 2008 from $2.5 billion to $2.0 billion, a 20 percent cut achieved "through currency factors, engagement with suppliers to extract favorable payment terms, and delays in launching HSPA-enabled networks in Moscow." (See MTS Deploys Ericsson HSPA.)

— Ray Le Maistre, International News Editor, Light Reading