Tata Communications, which has been spending as much as $450 million (Rs 2,232 crore) annually in capital expenditure for the last five years, will now reduce it by around half.
Vinod Kumar, the managing director of the company said that, for the next three years, it would spend around $250 million (Rs 1,237 crore), on an average. “For the last ten years, we have been building cables and other infrastructure. From now, we will be upgrading and expanding them, That will reduce capex,” he said.
Added to that, the company also hopes to fund its capex going forward from its free cash flows. “Last year, we have funded 65% of the capex from operating cash flows,” Kumar said.
The enterprise communications company will be increasing capacities of their fibre optic cables, as it believes that it can see a huge growth in data services. “We expect data traffic to grow by 80% in the next financial year. It has been growing by 60% annually in the last five years,” said Kumar
Tata Communications said that it will concentrate on three areas going ahead which would be cloud related services, collaborative services using video, and supporting mobile operations.
The current slowdown in the economic growth will not have any effect on the growth, the company believes. “Data growth is not slowing down with global slowdown. Multinational companies are increasing business operations in emerging markets,” said Kumar.
