Nov. 3 (Bloomberg) -- Reliance Communications Ltd. shares fell for a seventh day, their longest rout in more than a year, after India’s second-largest mobile-phone operator reported earnings that missed analysts’ estimates.

Reliance, untraded yesterday because of a holiday, fell 5.7 percent to 165.8 rupees in Mumbai and prolonged its spot as the worst performer on the benchmark Sensitive Index this year. It’s the stock’s longest streak of declines since Lehman Brothers Holdings Inc.’s bankruptcy last year.

Credit Suisse Group AG cut its share-price estimate on Reliance after the Mumbai-based company on Oct. 31 reported second-quarter net income tumbled 52 percent to a three-year low. India’s two biggest mobile-phone operators are the worst performers on the nation’s benchmark stock index on mounting concern competition has escalated to the point of a “price war.”

The decline in Reliance’s revenue and profitability is “shocking,” Bhuvnesh Singh, a Singapore-based analyst at Credit Suisse, wrote in a report today and cut his target price for the stock by 17 percent to 150 rupees. “The extent of decline has exceeded the other operators and also our expectations.”

Profit was 36 percent below the 11.5 billion-rupee ($244 million) median of 27 analyst estimates compiled by Bloomberg.

Missing Estimates

Sales for the three months ended Sept. 30 missed the median analyst estimate by 10 percent. Earnings before interest, depreciation and tax were 35.4 percent of sales, down from 40.8 percent a year earlier.

Bharti Airtel Ltd., the nation’s largest mobile-phone operator, last week reported profit growth slowed for the ninth quarter, and began offering customers call rates as low as 0.01 rupee a second to compete against NTT DoCoMo Inc. and Reliance.

“A price war is definitely going on, there are no two ways about it,” Saurabh Das, a telecommunications analyst at Sundaram BNP Paribas Asset Management Co., which manages about $2.2 billion in equities, said Oct. 30.

DoCoMo and Indian partner Tata Teleservices Ltd. in June offered Pay-As-You-Use plans with call rates of 0.01 rupee a second, according to a statement by the companies. Reliance Communications began offering customers call rates as low as 0.5 rupee a minute earlier this month.

Customers can make long-duration calls at 1 rupee for every three minutes, Reliance said today in an e-mailed statement.

Some of the operators in India are backed by the deep pockets of overseas partners including DoCoMo, Russia’s AFK Sistema and Norway’s Telenor ASA, Das said. Therefore “how long they can bleed is anybody’s guess, so while consolidation is imminent, the timing is of essence.”

To contact the reporter on this story: Harichandan Arakali in Bangalore at harakali@bloomberg.net.

Last Updated: November 3, 2009 07:47 EST