RCom shares were trading 0.5 per cent lower on Friday on the BSE. At about 11.30 am, the RCom stock was quoting at Rs 20.65, down 0.48 per cent on the BSE.
Fitch Ratings downgraded Reliance Communications further into junk territory on Thursday, becoming the latest credit agency to cast doubt on the Indian mobile phone operator's ability to meet its heavy debts. Fitch cut Reliance's long-term foreign- and local-currency ratings to “CCC” from “B-plus", and its $300 million 6.5 per cent senior secured notes due 2020 to “CCC/RR4” from “B+/RR4.” “RCom's rating downgrade reflects Fitch's belief that some kind of default is a real possibility,” the ratings agency said in a statement.
The downgrade comes amid growing concern that Reliance Communications, also known as RCom, will struggle to pay its hefty debts. Moody's Investors Service and its Indian affiliate ICRA cut their
RCom is working to merge its mobile services division with rival Aircel and is selling a stake in its mobile masts subsidiary to Canada's Brookfield. It expects to
The agency said its estimates for the residual company excluded RCom's undersea cable division Global Cloud Xchange (GCX), pointing out that it had covenants in place restricting "upstreaming of cash” to the parent. “At current and forecast levels of gearing, we do not believe GCX to be able to provide cash to support RCom's creditors,” Fitch said.
The company reported its first full-year loss last month. New entrant Reliance Jio added to the intense competition in the sector and triggered a price war. Shares in RCom lost over 40 per cent last month and hit a record low of Rs 18.15 on May 31 on the back of persistent worries about the company's debt and losses.
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