VimpelCom said Tuesday that it would raise capital spending by at least 50 percent next year to fund its third-generation network.
Although the telecoms industry has been less affected by the global economic downturn than most other sectors, many operators have cut capex as a cautionary measure, hurting equipment makers like Ericsson and Alcatel-Lucent. VimpelCom, Russia’s No. 2 mobile operator, also froze new equipment orders this year to focus on repaying debt and mitigate any potential impact of the crisis.
In the third quarter of 2009, its capital expenditure fell by 77.1 percent, year on year, to 3.8 billion rubles ($132 million), VimpelCom said Tuesday.
“For 2010, we expect a substantial increase of capex for VimpelCom. We haven’t made the final guidance, but it will be at least half as much as this year,” CEO Boris Nemsic told a news conference for the group’s Q3 results.
The results were its first since the settlement of a years-long ownership battle between Norway’s Telenor and Alfa Group, which agreed to merge their holdings in VimpelCom and Ukraine’s Kyivstar last month.
VimpelCom did not disclose exact capex forecasts for 2009 and 2010, but said the increase was needed to finance further expansion of its 3G network, while the strengthening of the ruble had also given it breathing space.
VimpelCom’s main rival, MTS, last month raised capex guidance for 2009 because of the ruble strengthening and the need to build infrastructure amid recovering traffic.
The company said Q3 net profit more than doubled to 13.51 billion rubles, helped by a massive foreign exchange loss in the third quarter of 2008. Although it missed a 16.36 billion ruble average forecast in a Reuters poll, the figure was within a wide range of 11.5 billion to 19.6 billion rubles.
The company also said its net debt decreased to $5.5 billion by the end of September from $6.3 billion at the end of June.
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