FW: RAM Ratings reaffirms TIME dotCom's AA3 sukuk rating

 

Published on 08 May 2018.

RAM Ratings has reaffirmed the rating of TIME dotCom Berhad (TIME or the Group)’s RM1 billion IMTN Programme (2015/2035) at AA3/Stable. The reaffirmation is anchored by TIME’s continued strong performance in FY Dec 2017 and our view that the Group will continue to maintain its sturdy financial profile, despite potentially significant capex for planned expansions within and outside Malaysia. Meanwhile, the rating is constrained by TIME’s limited scale in the fixed-line operating sphere, in view of its relatively small network and limited coverage compared to the domestic incumbent operator. The Group’s regional expansion plan, however, could supplement its earnings in the long run if executed successfully.

TIME has carved a niche in the domestic fixed-line telecommunications sector by offering competitive and flexible pricing plans, and providing good network quality and reliability. In FY Dec 2017, the fixed-line business remained the key contributor to the Group’s revenue, while the contributions from the global bandwidth business continued to be stable. The data centre segment enjoyed strong revenue growth as its customer numbers and uptake of its services maintained an uptrend. Going forward, we expect the enterprise segment to remain the linchpin of the Group’s top line as demand for broadband usage from large corporations and the uptake of its data centre services continue to rise. Further, the contribution from the retail segment is expected to continue to increase as TIME focuses on the expansion of its fibre optics network coverage in key residential high-rise buildings in the peninsula.

As a step in its aspiration to expand into neighbouring ASEAN markets, TIME has acquired substantial stakes in three telecommunication companies in Vietnam and Thailand since 2015 – CMC Telecommunications Infrastructure Corporation, KIRZ Co Ltd and Symphony Communication Public Company Limited. As the Group remains on the lookout for targets with valuable telecommunication assets to complement its expansion plans in the region, we do not discount its exposure to unfamiliar regulatory and operational risks.

In FY Dec 2017, TIME registered healthy adjusted gearing and funds from operations debt cover (FFODC) ratios of 0.25 times and 0.57 times, respectively, despite a heavier debt load. However, the Group remained in a net cash position. TIME is anticipated to service short-term debt amounting to approximately RM282 million in fiscal 2018, which will improve its debt coverage levels. For the next two years, however, we have factored in capex for the enhancement and expansion of the Group’s network and data centres within Malaysia as well as potential acquisitions in 2019. As these will be funded via a mix of internal funds and borrowings, we expect TIME’s adjusted FFODC to decline to 0.36 times in 2019.  

 

Analytical contact
Chinthamani Thanneermalai
(603) 7628 1013
chinthamani@ram.com.my 

Media contact
Padthma Subbiah
(603) 7628 1162
padthma@ram.com.my