June 1 (Reuters) -
* Fitch downgrades reliance communications to 'CCC'
* Fitch- Also downgraded rating on Rcom's USD300 million 6.5% senior secured notes due 2020 to 'CCC/RR4' from 'B+/RR4'
* Fitch- Rating watch negative on IDRS and notes has been removed on Reliance Communications
* Fitch- Rcom's rating downgrade reflects Fitch's belief that some kind of default is a real possibility
* Fitch- Believe that Rcom may struggle to refinance its maturing short-term debt given declining EBITDA and delays in executing asset sales
* Fitch- Believe that Rcom's business model is compromised due to fierce price competition in Indian mobile market
* Fitch- Rcom's capital structure is unsustainable as fy17 FFO-adjusted net leverage was over 9.0x and do not expect that operating cash flows will improve
* Fitch- Rcom's market position is weak and it has limited financial flexibility to invest to strengthen its position or step-up marketing costs
* Fitch- Have a negative outlook on Indian Telco market
* Fitch- Expect credit profiles of top-four Telcos to come under pressure from tougher competition and larger capex requirement
* Fitch- Rcom's size, scale and diversity will be much smaller should company complete sale of its tower business and demerge wireless unit as planned
* Fitch- Weakening cash generation from core wireless business may hamper plan to demerge wireless business into 50:50 jv and sell 51% of tower business Reliance Infratel
* Fitch- Even if transactions happen and debt is paid down, believe residual business is likely to be saddled with too much debt
* Fitch on Rcom- Do not believe that FY18 EBITDA will be sufficient to cover its annual interest cost and maintenance capex requirements Source text for Eikon: Further company coverage: