RAM Ratings has assigned a preliminary rating of AA3/Stable to TIME dotCom Berhad's (TIME or the Group) proposed RM1 billion Islamic MTN Programme (2015/2035) (the proposed Sukuk Programme). The rating reflects TIME's sound business position in the fixed-line space and the earnings diversity from its international bandwidth business as well as data centre. Nonetheless, the rating is constrained by TIME's small market share compared to its larger rival's which commands the lion's share of the wholesale and enterprise fixed-line market.
The proceeds from the proposed Sukuk Programme is expected to be utilised for, amongst others, expansion of its fibre footprint, further development of its data operations, refinancing of credit facilities and working capital requirements. As such, the Group's balance sheet and debt-servicing indicators are envisaged to moderate in line with its increasing debt load over the next few years - its funds from operations debt coverage ratio and gearing ratio are expected to come in at an average of 0.3 times over the next 3 years.
TIME is a data-centric, fixed-line telecommunications provider based in Malaysia. The Group delivers fibre optic-based telecommunication solutions to wholesale, enterprise and retail customers within Peninsular Malaysia. Since 2012, the Group has also been involved in the international bandwidth business (via GT Group) and data-centre operations (via the AIMS Group of Companies).
The fixed-line division will remain the linchpin of the Group's earnings, supported by the strong performance of the enterprise and wholesale segments. "Sturdy demand for bandwidth capacity and higher Internet usage remain a boon to the fixed-line segment," observes Davinder Kaur Gill, RAM's Co-Head of Infrastructure and Utilities Ratings. The Group is increasing its network presence by expanding the retail (mainly mutli-dwelling units) and enterprise segments. On this note, TIME's revenue and OPBDIT show CAGRs of a respective 19.3% and 28.5% for the past 3 years, recording highs of RM596.28 million and RM219.18 million in fiscal 2014.
TIME's international bandwidth business has been registering strong revenue and earnings growth over the past 3 years, underpinned by improved capacity utilisation for the trans-Pacific Unity North Cable System (UNITY), which reached approximately 90% in 2014. Prospects for its international bandwidth business remain bright pending the completion of the construction of 3 new international submarine cables - FASTER, Asia-Africa-Europe (AAE-1) and Asia Pacific Gateway (APG). The Group recently inked a Memorandum of Understanding to explore constructing a submarine cable from Peninsular to East Malaysia in collaboration with Telekom Malaysia, although details are scant at this juncture. TIME's data-centre business, meanwhile, has also been enjoying strong top-line growth, although margins have been trending downwards amid the more competitive operating environment.
Media contact
Chinthamani Thanneermalai
(603) 7628 1013
chinthamani@ram.com.my
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Published by RAM Rating Services Berhad
Copyright 2015 by RAM Rating Services Berhad
© Press Release 2015
