Moody's Investors Service has downgraded Reliance Communications (RCOM) corporate family rating and senior secured bond rating to Caa1 from B2. At the same time, the ratings are under review for further downgrade.

"The downgrade reflects RCOM's weak operating performance, high leverage and fragile liquidity position. The company's reported EBITDA has fallen 29% year-over-year, evidencing its weak market position and contracting subscriber base," says Annalisa DiChiara, a Moody's Vice President and Senior Credit Officer.

On May 27, RCOM reported an 11% YoY decline in revenues and a 29% contraction of EBITDA to Rs 53.9 billion (USD 830 million) for full year ending March 31, 2017 from Rs 76.3 billion (USD 1.2 billion) a year ago, while its EBITDA margin dropped to 27.0% from 34.2% over the same period. RCOM's weak operating results reflect the intense state of competition, driven in turn by the free services offered by Reliance Infocomm (RJio) from mid-September 2016 through 1 April 2017.