MUMBAI Indian mobile carrier Reliance Communications' (RLCM.NS) shares and bonds resumed their slide on Monday as concerns over its heavy debt load were reignited after a fourth-quarter loss that sent the company to its first full-year loss.
Banking sources told Reuters that the company is running behind on some loan repayments, though Reliance -- backed by billionaire Anil Ambani and widely known as RCom -- said it aims to repay lenders 250 billion rupees ($3.87 billion) by Sept. 30 following the planned merger of its wireless business with a smaller rival and selling an interest in its towers operation.
While the company did not comment directly on whether it had delayed loan interest payments, the head of RCom's consumer business, Gurdeep Singh, said in a conference call that RCom was in talks with lenders to defer loan instalments coming due over the next four months as it works to close the two deals.
Shares in the company fell more than 23 percent on Monday to a record low of 19.70 rupees before paring losses in afternoon trading. The stock, which has fallen 36 percent in the past 10 sessions, closed 20.4 percent down at 20.50 rupees.
A sell-off in its 2020 bonds also resumed, with yields spiking as high as 17.7 percent after ending last week at 12.3 percent.
"Private banking clients holding RCom dollar bonds are panic selling in small lots following weak results and reports about delays in domestic loan repayments," said one trader with a foreign bank.
The company on Saturday posted its second straight quarterly loss, dragged down by a price war in the wireless market instigated by the launch of Reliance Jio -- a venture backed by Anil's elder brother and India's richest man, Mukesh Ambani. For the full year to end-March it lost 12.85 billion rupees.
Anil won control of RCom when the Reliance empire was split in 2005 after a feud between the brothers. Mukesh ended up with the core oil refining and petrochemicals business, while Anil won control over the conglomerate's telecoms, financial services and power operations.
The brothers have since settled their differences, with Mukesh's new telecoms venture Reliance Jio entering pacts with Anil's RCom to share towers and networks.
But the price war sparked by months of free voice and data services from Jio have dented not only RCom, but also bigger rivals Bharti Airtel (BRTI.NS), Idea Cellular (IDEA.NS) and Vodafone's (VOD.L) Indian business.
"The current stress in the telecoms sector is a matter of grave concern not only for the industry players but also for the financial sector, regulators and government," said Singh, urging the government to formulate a financing package aid the sector.
RCom's customer base stood at 84.7 million subscribers at the end of March, down from 87.7 million at the end of December.
Cashflow from operations turned negative in the three months to March 31, while average revenue per user was down 8.4 percent from the previous quarter and net debt rose 3.6 percent from the previous three months to 443.45 billion rupees ($6.87 billion).
Executives of company, who were grilled by analysts on the conference call, said RCom will also cut debt by selling properties in New Delhi and the outskirts of Mumbai.
RCom said it is expects lender approvals in a few months for the planned merger of its wireless business with that of smaller rival Aircel, and for the sale of a majority stake in its towers business to Canada's Brookfield (BAMa.TO) for 110 billion rupees.
The cash from the deal with Brookfield will be used to repay some of its loans, while the combined 280 billion rupees in debt held by the combined RCom-Aircel wireless entity will be refinanced, company executives told analysts on the call.
($1 = 64.5350 Indian rupees)
(Additional reporting by Swati Bhat, Krishna Merchant and Euan Rocha in MUMBAI, Umesh Desai in HONG KONG and Jessica Kuruthukulangara and Samantha Nair in BENGALURU; Editing by Christopher Cushing and David Goodman)