Fitch Ratings has assigned India-based telecom service provider, Reliance Communications (Rcom), long-term foreign-and local-currency issuer default ratings (IDR) of 'BB-'. The outlook is stable.

Higher Leverage than Peers: Rcom's 'BB-' IDR is constrained due to its higher leverage and weaker market position than average for Fitch's-rated Asian telcos. Fitch's forecast for Rcom's funds flow from operations (FFO)-adjusted net leverage of 5.0x for the financial year ending Mar. 31, 2015 (FY15) is much higher than for its Indian peers. Market leader Bharti Airtel (Bharti; BBB-/Stable) leverage is below 2.5x and third-largest operator Idea Cellular is below 3.5x. The forecast leverage assumes payments in FY15 for licences in the March 2015 spectrum auction.

The ratings incorporate management's commitment to deleverage and Fitch's expectation that Rcom will manage its leverage below 4.5x during 2015-16. We believe that deleveraging will be mainly driven by an EBITDA expansion and a planned sale of non-core assets. Fitch acknowledges management's commitment to repay part of its USD6bn in net debt through sale of assets including its sub-sea cable subsidiary Global Cloud Xchange (GCX; B+/Stable), real estate and its pay-TV business. Management intends to achieve a target debt/EBITDA of below 3.0x by end-March 2017.

Shares of the company gained Rs 0.75, or 1.14%, to trade at Rs 66.55. The total volume of shares traded was 837,606 at the BSE (1.06 p.m., Tuesday).