The bonds of Reliance Communications Ltd., the wireless carrier controlled by Anil Ambani, fell to a record low after the company’s credit rating was cut as the carrier struggles to compete in India’s competitive cellphone market. The price of the company’s $300 million 6.5 percent note due 2020 fell 18 cents on the dollar to 64.7 cents as of 12:25 p.m. in Hong Kong, according to Bloomberg-compiled prices. The bonds have plunged 36 cents so far this week.
Once among India’s top cellphone carriers, Reliance Communications struggled to compete as the nation’s market became increasingly competitive, particularly after the entry of Reliance Jio Infocomm Ltd., launched by Anil’s brother and India’s richest man Mukesh Ambani. Care Ratings last week cut its rating on Reliance Communications’s long-term bank facilities and non-convertible debentures, citing increased competition, high debt levels and lower cash accruals. ICRA Ltd. cut its rating earlier this month, with a negative outlook, citing weakening prospects for revenue generation and profitability.
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Debtwire earlier reported that the company was months late in servicing its loans, and had engaged in talks with creditors to explore payment options. Reliance Communications shares fell 0.7 percent on Wednesday in Mumbai and have dropped 18 percent so far this year.
Reliance Communications spokesman Rajeev Narayan declined to comment, citing the company’s silent period ahead of its earnings’ announcement.