Canadian research firm Veritas has downgraded Reliance Communications (RCom) to 'sell' and has slashed it target price by over 75 per cent to Rs15, which the Anil Ambani-promoted company termed as lacking credibility and is ''mala fide'' in intent and approach.

Stating that ''RCom is a house of cards'', the research agency cited high debt, "whimsical" accounting policies and poor corporate governance standards as the key reasons for the downgrade.

''RCom is entering a phase of maximum uncertainty,'' it said, adding, ''since our last report on the company, the stock is down approximately 32 per cent. We believe there is significant additional downside''.

The report also states that the management will have to work out the debt repayment obligations of nearly $2.2 billion over the next two years, even as the EBIDTA in its core telecom business is languishing.

''In our view, macro-economic conditions in India are deteriorating at a rapid rate. Fractured policy making, high inflation, an uncontrollable fiscal deficit, in addition to a hyper-competitive telecommunication business, are highly detrimental to the prospects of RCom,'' it said.

The Anil Ambani group company is reportedly downsizing its capital expenditure and is looking to hive off some of its assets. However, with the precarious position of the company in the Indian telecom sector, the reduction in capex would work against the interests of the company.

According to the research agency, RCom will have to improve its GSM spectrum position and for this it would need higher capex to maintain its quality of service.

The research firm also said that RCom's attempts to sell tower assets would be difficult, as it does not foresee any significant improvement in the tower market in the next 12-18 months.

''We estimate that at best the company can monetise its Reliance Infratel (''RIF'') tower asset at a diminished value of Rs12,500 crore ($2.36 nilion), compared to rumors in the marketplace ascribing a valuation upwards of Rs22,500 crore ($4.2 billion),'' it added.

However, RCom lashed out at the report stating it lacks ''any credibility and is mala fide''.

''An orchestrated media dissemination reveals ulterior and dishonest motives. Report full of factual inaccuracies and baseless allegations masquerading as research. RCOM is fully compliant with all prescribed accounting policies and governance norms. Attributed valuations reflect Veritas' complete lack of understanding of RCOM's assets and businesses. Veritas is systematically working to destroy confidence in Indian capital markets through sensationalist reports," RCom said.