Bengaluru: Reaching nearly an eight-week low, Bharti Airtel Ltd's shares plunged 4.5 percent on Tuesday, with rating firm Moody's Investors Service downgrading some notes of the telecoms company by subscribers. Suffering from continuing pricing pressure, Airtel, India's second largest telecoms company, posted a 72 percent fall in quarterly profits last month. Airtel and Vodafone Idea are both hoping to chase quality mobile broadband customers to compete with the fast-growing Reliance Jio Infocomm.

Telecoms industry still shaking from Jio effect

The results were announced at a time when India's telecoms industry has been stumbling because of the price war which began after Reliance Jio's arrival in the telecoms industry. The rating agency downgraded the senior unsecured rating for Airtel and the backed senior unsecured notes issued by unit Bharti Airtel Int'l (Netherlands) B.V. to 'Ba1' from 'Baa3'.

'Outlook is negative'

Saying the outlook is negative, Moody's withdrew the company's 'Baa3' issuer rating.

"A significant recovery in cash flow from the core Indian mobile segment is needed to strengthen the company's credit quality and support greater financial flexibility."

"The downgrade reflects uncertainty as to whether or not the company's profitability, cash flow situation, and debt levels can improve sustainably and materially, given the competitive dynamics in the Indian telco market," Annalisa DiChiara, Moody's vice president and senior credit officer, said in a note.

"A significant recovery in cash flow from the core Indian mobile segment is needed to strengthen the company's credit quality and support greater financial flexibility."

Concerns over Airtel also had an effect on the S&P BSE telecom index, which fell 3 percent. Ahead of the December-quarter results, Vodafone Idea also dropped 1.5 percent.