Reliance Communications hits 2-month low as Moody's cuts rating to 'negative'
Moody's said the negative outlook reflects its view that ongoing delays in RCom's rollout of the deleveraging plans will keep the operator's financial and credit profile strained over the near term.
- Apr 8, 2016,
- Updated Apr 8, 2016 3:47 PM IST
Shares of Reliance Communications (RCom) shed nearly 3 per cent in trade on Friday after global rating agency Moody's Investors Service changed the outlook of the company to negative from stable.
The rating agency said there are persistent delays in the company's sale of non-core assets. The stock of RCom hit an intraday low of Rs 48.75, down 2.88 per cent on the Bombay Stock Exchange (BSE). The scrip settled the day flat.
Moody's said the negative outlook reflects its view that ongoing delays in RCom's rollout of the deleveraging plans will keep the operator's financial and credit profile strained over the near term.
"The change in outlook to negative from stable reflects persistent delays in the company's sale of non-core assets, which underpins its deleveraging strategy. As such, there is unlikely to be material improvement in leverage as well as associated liquidity and refinancing pressures over the next 6-9 months, even if the company announces a binding tower sale transaction this quarter," says Nidhi Dhruv, Moody's Vice-President and Senior Analyst.
Furthermore, Moody's said the negative outlook encapsulates expected changes in the key terms of the transaction - including valuation, which in its view could be up to 20-25 per cent lower than its earlier estimates of $3.4 billion.
The ratings agency said that upon completion of the share swap transaction with Sistema Shyam Teleservices (SSTL), RCom will have adequate spectrum.
However, should the company participate in the upcoming spectrum auction, its leverage metrics will be further pressured.
Shares of Reliance Communications (RCom) shed nearly 3 per cent in trade on Friday after global rating agency Moody's Investors Service changed the outlook of the company to negative from stable.
The rating agency said there are persistent delays in the company's sale of non-core assets. The stock of RCom hit an intraday low of Rs 48.75, down 2.88 per cent on the Bombay Stock Exchange (BSE). The scrip settled the day flat.
Moody's said the negative outlook reflects its view that ongoing delays in RCom's rollout of the deleveraging plans will keep the operator's financial and credit profile strained over the near term.
"The change in outlook to negative from stable reflects persistent delays in the company's sale of non-core assets, which underpins its deleveraging strategy. As such, there is unlikely to be material improvement in leverage as well as associated liquidity and refinancing pressures over the next 6-9 months, even if the company announces a binding tower sale transaction this quarter," says Nidhi Dhruv, Moody's Vice-President and Senior Analyst.
Furthermore, Moody's said the negative outlook encapsulates expected changes in the key terms of the transaction - including valuation, which in its view could be up to 20-25 per cent lower than its earlier estimates of $3.4 billion.
The ratings agency said that upon completion of the share swap transaction with Sistema Shyam Teleservices (SSTL), RCom will have adequate spectrum.
However, should the company participate in the upcoming spectrum auction, its leverage metrics will be further pressured.