Hong Kong: Reliance Communications Ltd, the Indian mobile phone operator controlled by billionaire Anil Ambani, said it isn’t paying a dollar bond coupon.

The failure to honour the obligation marks the company’s first missed interest payment on a note in the US currency, and represents the latest setback amid a shakeout in the world’s second-largest telecom market. The firm announced last month the collapse of its merger plans with rival Aircel Ltd, a deal which could have helped it pare debt and better compete with rivals.

The interest payment of about $9.75 million for Reliance Communications’ notes maturing November 2020 was due on Monday, according to data compiled by Bloomberg. The company is in a so-called standstill period with its lenders until December 2018.

“For the time being, no payment of interest and/or principal is being made to any lenders and/or bondholders," the company wrote in a statement.

Reliance Communications, whose customer base of about 75 million people is dwarfed by Idea Cellular Ltd and Bharti Airtel Ltd, announced plans last week to sell down assets and proposed converting Rs7,000 crore ($1.1 billion) of debt into equity. The embattled mobile operator has said it will cut back on its second-and third-generation wireless networks from 30 November and also faces an insolvency petition.

The price of the $300 million of 6.5% securities on which the company owed the interest payment slid 1.4 cents, the sharpest decline in more than a month, to 39.8 cents, according to prices compiled by Bloomberg.

The recovery value for offshore bondholders may not be too high, according to Nomura Holdings Inc.

If the banks go ahead with Reliance Communications’ proposal and take a 51% stake in the company through the debt swap, and if bondholders are treated below other secured debt, then their recovery will be nil, said Pavitra Sudhindran, credit analyst at Nomura. “If bondholders are treated pari passu with other secured debt, our base case recovery is 35 cents," she said. Bloomberg

Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.