RAM Ratings reaffirms AAA/Stable/P1 rating of Digi's sukuk

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1. IB ​ ​Press​ ​Release​ ​Service Published​ ​on:​​ ​IslamicBanker.com​ ​Publications:​ ​https://www.islamicmarkets.com/publications RAM​ ​Ratings​ ​reaffirms​ ​AAA/Stable/P1​ ​rating of​ ​Digi's​ ​sukuk 8​ ​January​ ​2018 RAM​ ​Ratings​ ​has​ ​reaffirmed​ ​the​ ​AAA/Stable/P1​ ​ratings​ ​of​ ​Digi​ ​Telecommunications​ ​Sdn​ ​Bhd's (Digi​ ​or​ ​the​ ​Company)​ ​RM5​ ​billion​ ​Islamic​ ​Medium​ ​Term​ ​Notes​ ​Programme​ ​(2017/2032)​ ​and RM1​ ​billion​ ​Islamic​ ​Commercial​ ​Papers​ ​(2017/2024),​ ​both​ ​of​ ​which​ ​are​ ​subject​ ​to​ ​a​ ​combined limit​ ​of​ ​RM5​ ​billion.​ ​The​ ​reaffirmation​ ​of​ ​the​ ​issue​ ​ratings​ ​reflects​ ​Digi's​ ​well-established​ ​position in​ ​the​ ​mobile​ ​industry,​ ​underpinned​ ​by​ ​its​ ​sturdy​ ​performance​ ​and​ ​financial​ ​profile. The​ ​ratings​ ​take​ ​account​ ​of​ ​Digi's​ ​close​ ​relationship​ ​with​ ​its​ ​indirect​ ​shareholder,​ ​Telenor​ ​ASA (Telenor​ ​or​ ​the​ ​Group),​ ​a​ ​Norway-based​ ​telecommunication​ ​services​ ​provider.​ ​Accordingly, support​ ​from​ ​Telenor​ ​is​ ​deemed​ ​highly​ ​likely​ ​and​ ​is​ ​anticipated​ ​to​ ​be​ ​readily​ ​extended​ ​if​ ​and when​ ​required.​ ​Moreover,​ ​Digi's​ ​relationship​ ​with​ ​Telenor​ ​enables​ ​the​ ​Company​ ​to​ ​enjoy economies​ ​of​ ​scale​ ​through​ ​coordinated​ ​corporate​ ​procurement.​ ​Digi​ ​also​ ​benefits​ ​from​ ​the transfer​ ​of​ ​technical​ ​know-how​ ​from​ ​Telenor,​ ​especially​ ​in​ ​the​ ​areas​ ​of​ ​operational​ ​performance, development​ ​of​ ​services​ ​and​ ​technological​ ​convergence.​ ​Digi​ ​is​ ​considered​ ​a​ ​key​ ​long-term investment​ ​of​ ​Telenor,​ ​given​ ​that​ ​the​ ​Company​ ​accounted​ ​for​ ​about​ ​9.7%​ ​and​ ​11.1%​ ​of​ ​the Group's​ ​revenue​ ​and​ ​operating​ ​profit​ ​before​ ​depreciation,​ ​interest​ ​and​ ​tax​ ​(OPBDIT), respectively,​ ​in​ ​9M​ ​2017. Amid​ ​the​ ​saturated​ ​mobile​ ​market​ ​and​ ​aggressive​ ​price​ ​competition,​ ​Digi​ ​is​ ​the​ ​sole​ ​mobile operator​ ​to​ ​increase​ ​its​ ​subscriber​ ​market​ ​share​ ​in​ ​the​ ​last​ ​3​ ​quarters.​ ​As​ ​at​ ​3Q​ ​2017,​ ​the Company​ ​retained​ ​its​ ​pole​ ​position​ ​as​ ​the​ ​largest​ ​mobile​ ​operator​ ​(since​ ​2016),​ ​with​ ​36.3%​ ​of subscriber​ ​market​ ​share​ ​or​ ​11.9​ ​million​ ​subscribers.​ ​Additionally,​ ​the​ ​Company​ ​possesses​ ​a strong​ ​revenue​ ​and​ ​cash-generating​ ​aptitude.​ ​Digi's​ ​revenue​ ​market​ ​share​ ​remained​ ​resilient, while​ ​its​ ​adjusted​ ​OPBDIT​ ​margin​ ​of​ ​51.23%​ ​in​ ​9M​ ​2017​ ​is​ ​still​ ​one​ ​of​ ​the​ ​highest​ ​among​ ​local and​ ​ASEAN​ ​peers.​ ​Meanwhile,​ ​the​ ​Company's​ ​debt​ ​is​ ​expected​ ​to​ ​peak​ ​at​ ​RM3.2​ ​billion​ ​over the​ ​next​ ​3​ ​years,​ ​pushing​ ​its​ ​gearing​ ​ratio​ ​to​ ​6.08​ ​times​ ​from​ ​5.00​ ​times​ ​currently.​ ​Nonetheless, its​ ​funds​ ​from​ ​operations​ ​debt​ ​coverage​ ​will​ ​stay​ ​robust,​ ​hovering​ ​between​ ​0.67​ ​and​ ​0.69​ ​times over​ ​the​ ​same​ ​period. In​ ​view​ ​of​ ​the​ ​high​ ​concentration​ ​of​ ​migrants​ ​in​ ​its​ ​subscriber​ ​base,​ ​the​ ​Company​ ​is​ ​also exposed​ ​to​ ​forex​ ​risk.​ ​As​ ​the​ ​cost​ ​of​ ​international​ ​direct​ ​dialing​ ​ ​to​ ​which​ ​migrants​ ​are​ ​attracted is​ ​paid​ ​in​ ​foreign​ ​currencies,​ ​mainly​ ​US​ ​dollars,​ ​any​ ​depreciation​ ​of​ ​the​ ​ringgit​ ​will​ ​crimp​ ​the Company's​ ​OPBDIT​ ​margin.
2. IB ​ ​Press​ ​Release​ ​Service Published​ ​on:​​ ​IslamicBanker.com​ ​Publications:​ ​https://www.islamicmarkets.com/publications Organisation​ ​Name: News​ ​Type: RAM​ ​Rating​ ​Services​ ​Berhad RATING​ ​ANNOUNCEMENT Source: BNM​ ​Announcements Media​ ​Contact Padthma​ ​Subbiah (603)​ ​7628​ ​1162 padthma@ram.com.my Disclaimer: The​ ​credit​ ​rating​ ​is​ ​not​ ​a​ ​recommendation​ ​to​ ​purchase,​ ​sell​ ​or​ ​hold​ ​a security,​ ​inasmuch​ ​as​ ​it​ ​does​ ​not​ ​comment​ ​on​ ​the​ ​security's​ ​market price​ ​or​ ​its​ ​suitability​ ​for​ ​a​ ​particular​ ​investor,​ ​nor​ ​does​ ​it​ ​involve​ ​any audit​ ​by​ ​RAM​ ​Ratings.​ ​The​ ​credit​ ​rating​ ​also​ ​does​ ​not​ ​reflect​ ​the legality​ ​and​ ​enforceability​ ​of​ ​financial​ ​obligations. RAM​ ​Ratings​ ​receives​ ​compensation​ ​for​ ​its​ ​rating​ ​services,​ ​normally paid​ ​by​ ​the​ ​issuers​ ​of​ ​such​ ​securities​ ​or​ ​the​ ​rated​ ​entity,​ ​and sometimes​ ​third​ ​parties​ ​participating​ ​in​ ​marketing​ ​the​ ​securities, insurers,​ ​guarantors,​ ​other​ ​obligors,​ ​underwriters,​ ​etc.​ ​The​ ​receipt​ ​of this​ ​compensation​ ​has​ ​no​ ​influence​ ​on​ ​RAM​ ​Ratings'​ ​credit​ ​opinions or​ ​other​ ​analytical​ ​processes.​ ​In​ ​all​ ​instances,​ ​RAM​ ​Ratings​ ​is committed​ ​to​ ​preserving​ ​the​ ​objectivity,​ ​integrity​ ​and​ ​independence​ ​of its​ ​ratings.​ ​Rating​ ​fees​ ​are​ ​communicated​ ​to​ ​clients​ ​prior​ ​to​ ​the issuance​ ​of​ ​rating​ ​opinions.​ ​While​ ​RAM​ ​Ratings​ ​reserves​ ​the​ ​right​ ​to disseminate​ ​the​ ​ratings,​ ​it​ ​receives​ ​no​ ​payment​ ​for​ ​doing​ ​so,​ ​except for​ ​subscriptions​ ​to​ ​its​ ​publications. Similarly,​ ​the​ ​disclaimers​ ​above​ ​also​ ​apply​ ​to​ ​RAM​ ​Ratings' credit-related​ ​analysis​ ​and​ ​commentaries,​ ​where​ ​relevant.