Dec 27 2012
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MARC affirms Tele-Flow Capital Sdn Bhd's RM90.0 million MUNIF/IMTN facility at MARC-1ID/AAID and upgrades RM10.0 million Junior IMTN Facility to AA-ID
Tele-Flow Capital is a wholly-owned funding vehicle of Tele-Flow Corporation Sdn Bhd (Tele-Flow Corp) and was incorporated to issue the notes to finance the construction/acquisition of telecommunication towers or structures in Kedah. The rating affirmation reflects the credit quality of the assigned rental revenue from creditworthy telecommunication companies (telcos) as the source of repayment of the notes. The stability and predictability of the rental revenue are underpinned by a 10-year license agreement between Yiked Bina Sdn Bhd (YBSB), a joint-venture company between Tele-Flow Corp and the Kedah state government that holds exclusive rights to construct and manage telecommunication towers in the state, and the three telcos, namely Celcom Axiata Bhd (Celcom), Maxis Broadband Bhd (Maxis) and DiGi Telecommunications Sdn Bhd (DiGi). YBSB has assigned the rental payments from the telcos to Tele-Flow Corp, which in turn has assigned the same to Tele-Flow Capital.
Rental payments from the 136 completed telecommunication towers are directed into a trustee-controlled collection account, following which 60% of the total rental payment will be transferred into a sinking fund account to meet the debt service obligations on the notes with the balance channelled into an operations account for maintenance works. Tele-Flow Capital maintained comfortable covenant headroom with respect to its finance service cover ratio (FSCR) which stood at 29.4 times (x) as at December 31, 2011, well above its minimum covenant of 1.5x. The one-notch upgrade of the Junior Notes is premised on the improved debt service coverage, which is expected to strengthen over the remaining tenure of the facility, particularly in view of the unlikely event of further debt being issued before the expiry of the Senior Notes in 2013.
The stable outlook reflects the expectation of stable and timely lease payments from the telcos for the financed towers.
Se Tho Mun Yi, +603-2082 2263/ firstname.lastname@example.org;
Sonia Lim, +603-2082 2267/ email@example.com;
Sharidan Salleh, +603-2082 2254/ firstname.lastname@example.org.
© Press Release 2012
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