KUALA LUMPUR: RAM Rating Services Bhd said TELEKOM MALAYSIA BHD []'s (TM) proposed RM2 billion debt facilities will see its gearing ratio peak at 1.12 times by end-2012 with a RM7.53 billion debt load before tapering off.
The ratings agency said on Thursday, April 21 this is assuming a full drawdown of the debt facilities, which are solely for capital expenditure, by 2012.
It said the additional borrowings will affect TM's balance sheet (on a pro-forma basis) and increase the gearing ratio from 0.70 times and RM5.53 billion of debts as at end-2010.
RAM Ratings had assigned final short- and long-term ratings of P1 and AAA to TM's respective proposed Islamic commercial papers programme and Islamic medium-term notes programme, with a total combined limit of RM2 billion; the long-term rating has a stable outlook.
'The ratings reflect the Group's strong credit profile, underpinned by its strategic importance as the national telecommunications company and healthy financial profile. TM boasts a strategic and prominent position within Malaysia's telecommunications industry, with a near-monopoly over the fixed-line telephony business (a market share of more than 90%).
'Meanwhile, it has maintained its leadership in the fixed broadband space, commanding about 80% of this market, supported by its 1.68 million Streamyx subscriber base as at end-December 2010,' it said.
However, RAM Ratings said the maturity of the voice market is still challenged by consumers' substitution of fixed-line services in favour of cellular and Internet-based communications.
Competition is also increasing in the broadband scene, particularly from the robust growth of wireless broadband, attributable to rapidly evolving mobile TECHNOLOGY [] and ongoing handset innovations.
'Despite this, we expect TM's broadband base to expand steadily given its comprehensive network and ability to capitalise on its voice-based clientele to support the take-up of its data offerings. Notably, the take-up of high-speed broadband (or Unifi) has been growing at a steady pace, with 51,000 customers as at end-February 2011,' it said.
TM's financial position is characterised by its relatively stable revenue and cashflow as well as strong debt-coverage levels.
The ratings agency said on Thursday, April 21 this is assuming a full drawdown of the debt facilities, which are solely for capital expenditure, by 2012.
It said the additional borrowings will affect TM's balance sheet (on a pro-forma basis) and increase the gearing ratio from 0.70 times and RM5.53 billion of debts as at end-2010.
RAM Ratings had assigned final short- and long-term ratings of P1 and AAA to TM's respective proposed Islamic commercial papers programme and Islamic medium-term notes programme, with a total combined limit of RM2 billion; the long-term rating has a stable outlook.
'The ratings reflect the Group's strong credit profile, underpinned by its strategic importance as the national telecommunications company and healthy financial profile. TM boasts a strategic and prominent position within Malaysia's telecommunications industry, with a near-monopoly over the fixed-line telephony business (a market share of more than 90%).
'Meanwhile, it has maintained its leadership in the fixed broadband space, commanding about 80% of this market, supported by its 1.68 million Streamyx subscriber base as at end-December 2010,' it said.
However, RAM Ratings said the maturity of the voice market is still challenged by consumers' substitution of fixed-line services in favour of cellular and Internet-based communications.
Competition is also increasing in the broadband scene, particularly from the robust growth of wireless broadband, attributable to rapidly evolving mobile TECHNOLOGY [] and ongoing handset innovations.
'Despite this, we expect TM's broadband base to expand steadily given its comprehensive network and ability to capitalise on its voice-based clientele to support the take-up of its data offerings. Notably, the take-up of high-speed broadband (or Unifi) has been growing at a steady pace, with 51,000 customers as at end-February 2011,' it said.
TM's financial position is characterised by its relatively stable revenue and cashflow as well as strong debt-coverage levels.
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