NEW DELHI— Reliance Communications Ltd. 532712.BY +1.35% said on Friday it has fully repaid an overseas loan of about $500 million, a move aimed at reducing its heavy interest costs and improving profitability. 

 
Costs for the company, which is the flagship telecom venture of billionaire Anil Ambani's Reliance Group, have risen because of high interest burden on loans it took to purchase bandwidth through a government auction in 2010. Stiff competition in the telecom sector has put further pressure on profits. 

The company's debt rose 8% to 388.64 billion rupees ($6.23 billion) in the last financial year, resulting in a 29% jump in its finance costs to 7.47 billion rupees. 
 
This is the third such loan repayment by the company since the start of the fiscal year in April. It had earlier repaid two other syndicated overseas loans totaling about $1 billion, and another loan of $310 million.
 

"With these repayments, Reliance Communications has now fully liquidated the borrowings from 23 foreign banks and financial institutions," India's fourth-largest telecommunications company said in a statement.


Write to R. Jai Krishna at krishna.jai@wsj.com