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Reliance Communications shares fall over 9% on slew of downgrades

LiveMint logoLiveMint 31-05-2017 Nasrin Sultana

Mumbai: Shares of Reliance Communications Ltd (RCom) extended its losses, falling 9.4% intraday on Wednesday after a slew of downgrades by rating agencies. Care Ratings and Icra Ltd have downgraded the telecom operator’s short- and long-term debt to default.

Also, Moody’s Investors Service has downgraded corporate family rating and senior secured bond rating to Caa1 from B2 and the ratings are under review for further downgrade.

RCom in a statement to the BSE said that the reasons for these revisions include it’s weak operating performance, high leverage, the weak internal cash flow generation against sizeable debt servicing obligations and delays in debt servicing by the company.

It added that the company’s two transactions to merge its wireless operations with that of the Aircel Group and to offload its tower business to Brookfield Infrastructure Group will entail transfer and reduction of debt along with concomitant transfer of revenue and Ebitda from the company.

RCom stated that it has formally advised all its lenders that it will be making repayment of an aggregate amount of Rs25,000 crore from the proceeds of these two transactions, on or before 30 September. “The said amount will cover not only all scheduled repayments, but also include substantial pre-payments to all lenders on a pro-rata basis,” it said.

RCom had a debt of Rs47,332 crore on its books at the end of March, compared to Rs39,828 crore a year ago. It reported a loss of Rs948 crore in the March quarter from a net profit of Rs79 crore in corresponding period last fiscal. During the period, its consolidated total income fell 24% to Rs4,524 year-on-year.

At 11.10am, Reliance Communications was quoting at Rs18.30, down Rs1.75, or 8.73% on the BSE. The stock is down nearly 30% in last 5 trading sessions.

Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case

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