profile search
latest updates
Press Release
02 Jan | Tuesday
RAM Ratings reaffirms AA3/Stable rating of BGSM Management’s sukuk

RAM Ratings has reaffirmed the AA3/Stable rating of BGSM Management Sdn Bhd’s (BGSM Management or the Group) IMTN Programme of up to RM10 billion in nominal value (2013/2043). The reaffirmation of the issue rating is premised on the well-established market position of its sole subsidiary, Maxis Berhad (Maxis), in the Malaysian mobile market. The issue rating also takes into account the IMTN’s structural subordination to Maxis’ considerable priority debt.

Maxis maintained its sturdy cashflow-generating ability, which was underpinned by robust profitability, in 9M FY Dec 2017, with its adjusted operating profit before depreciation, interest and tax (OPBDIT) margin coming in at 53.9% – still one of the highest among local and ASEAN peers. Maxis posted RM6.5 billion in revenue which placed it ahead of its rivals. Its revenue achievement translated to 40.6% of the RM16.1 billion cumulative revenue earned by Malaysian mobile incumbents as at 9M 2017.

At Group level, BGSM Management’s funds from operations debt coverage stood at 0.28 times in fiscal 2016 on the back of its better-than-anticipated financial performance. Taking into account the potential 700MHz spectrum and the competitive operating landscape, its debt coverage is envisaged to stay above 0.25 times from fiscal 2018 to 2020. After the private placement in June 2017, Maxis repaid some of its borrowings. Nonetheless, the total debt of the Group after this exercise still stood at a hefty RM12 billion as at end-September 2017 (end-2016: RM14 billion). Potential further debt-funded capex, given the marginally lower spectrum holdings of Maxis and continued competition, as well as the possibility of a reallocation or tender for other spectrums in coming years, might exert pressure on the Group’s credit profile.

Analytical contact
Ong Ju Laine
(603) 7628 1183
julaine@ram.com.my

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

Date of release: 2 January 2018

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 analyses and commentaries, where relevant.

Published by RAM Rating Services Berhad
© Copyright 2018 by RAM Rating Services Berhad’s

Print Mail Twitter LinkedIn Facebook Google+
Past Articles
2018
May
April
March
February
January
2017
December
November
October
September
August
July
June
May
April
March
February
January
2016
December
November
September
July
June
May
April
March
2015
June
May
April
March
February
January
2014
December
November
October
September
August
July
June
May
April
March
February
January
2013
December
October
July
May
April
March
2012
December