Bharti Airtel Ltd's shares fell 4.5 percent on Tuesday to a near eight-week low, after ratings agency Moody's Investors Service downgraded some notes of India's second-largest telecoms company by subscribers.
Airtel, once seen as the bellwether of the domestic telecoms industry, posted a nearly 72 percent fall in quarterly profit last Thursday, suffering from continuing pricing pressure.
The telecoms industry is still reeling from the impact of a price war which began after the entry of Reliance Jio Infocomm Ltd, owned by India's richest man Mukesh Ambani.
The shake-up resulted in industry consolidation such as London-based Vodafone Plc merging its Indian operations with Idea Cellular in a deal worth $23 billion, making it the biggest telecoms company.
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Moody's 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' on Tuesday.
The agency withdrew the company's 'Baa3' issuer rating and said the outlook is negative.
"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 took a toll on the S&P BSE telecom index, which dropped as much as 3 percent.
Vodafone Idea Ltd was down 1.5 percent ahead of its December-quarter results on Wednesday.
Smaller rival Reliance Communications Ltd extended its sharp falls after it moved the National Company Law Appellate Tribunal (NCLT) on Monday to withdraw its appeal in a dispute with Ericsson as it seeks to pursue a debt resolution plan through the country's bankruptcy court.
Last week, the company had said it would seek fast-track resolution of its debt through the tribunal, the country's court that deals with bankruptcy cases.