NEW DELHI: Mukesh Ambani-led Reliance Jio is facing intense competition from incumbent telecom operators, which may impact its profitability and returns, India Ratings and Research (Ind-Ra) said in a note.
The agency has also assigned Jio a Long-Term Issuer Rating of ‘IND AAA’ with a Stable Outlook. It also assigned Jio’s Rs 100 billion bank loan facilities an ‘IND AAA’ with a Stable Outlook and an ‘IND A1+’ rating.
Ind-Ra said that the country’s telecom industry is exposed to intense competition, which is capital intensive in nature, and is subject to changes in technology and regulatory environment.
At end-FY16, RIL had invested equity of Rs 447 billion into RJio and has recently proposed a rights issue of Rs 150bn in the form of 9% non-cumulative optionally convertible preference shares. Furthermore, both parent and subsidiary share a common name Reliance and Jio represents the group’s presence in the telecom business.