UPDATE 1-India Tata Comm sees capex up to $500 mln next FY

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NEW DELHI, March 12 (Reuters) - India's Tata Communications (TATA.BO) has resources to fund ongoing capital expenditure and plans to spend about $400-$500 million during the fiscal year that begins April 1, a senior official said on Thursday.

Srinivasa Addepalli, senior vice president for corporate strategy, told reporters that did not include funds for a pending Wimax auction due later this year.

He said the company was on track to spend up to $500 million in the year to March 2009 and he expected a "similar order of magnitude" for the next fiscal year.

The New York-listed company (TCL.N), formerly Videsh Sanchar Nigam Ltd, provides international calls and network services for companies. India's government holds a 26 percent stake in the firm, while Tata Group firms own about 50 percent of its shares.

Media reports have said Tata Communications' liquidity was near a "critical" level and it had sought the government's approval to raise funds.

But Addepalli said the firm had raised $350 million in debt over the last few months and had $300 million in cash on its balance sheet as of end-January, sufficient to fund their ongoing expansion -- apart from the Wimax sale.

"There is no liquidity constraint. There is no funding critical position," he said, adding lenders had shown interest to fund Wimax bids.

Addepalli said a rights issue was an option for the company to raise more funds, but may not be pursued in the near term.

Tata Communications had a 15 percent stake in mobile operator Tata Teleservices, in which Japan's NTT DoCoMo (9437.T) is buying 26 percent.

Tata Communications will sell 0.6 percent of its holding in the mobile operator, Addepalli said, and its stake would fall to just over 10 percent after the equity dilution.

The company, together with other Tata firms, owns about 56 percent in South Africa's second-biggest fixed-line phone operator, Neotel [NEO.UL], and was not planning to raise it, he said. (Reporting by Devidutta Tripathy; Editing by John Mair/Mark Williams)