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RAM Ratings reaffirms TIME dotCom’s AA2 sukuk rating
Published on 06 Sep 2022.
RAM Ratings has reaffirmed the rating of TIME dotCom Berhad’s (TIME or the Group) RM1 bil Islamic Medium-Term Notes Programme (2017/2037) at AA2/Stable.
The rating is premised on TIME’s solid operational performance and resilient financial metrics. TIME’s ability to provide competitively priced products and digital solutions with superior network quality, and the agility to swiftly adapt to customer demands give the Group an edge. This coupled with a strategic approach focusing on high-density, high-rise buildings has enabled TIME to yield better margins and enlarge its customer base faster. Notwithstanding its capital-intensive business, TIME has been generating positive free operating cashflow and is in a net cash position since 2014.
TIME’s acquisition of AVM Cloud Sdn Bhd and the launch of new leasable data center space last year are timely to capitalise on cloud adoption and data center migration opportunities. New entrants to the fixed-line marketplace did not prevent the Group’s retail customer segment from registering strong double-digit growth in 2021.
TIME is one of the pioneers in the local data center space. Despite having expanded its data center footprint by 34.6% to 111,640 sf last year, the Group maintained a healthy occupancy rate with some price pressure as of end-December 2021. We view the prospects of this sector positively amid the digitalisation wave, though any large domestic capacity boost by global hyperscalers should be approached with caution.
The inclusion of AVM Cloud’s results bolstered TIME’s financial performance for FY Dec 2021, enabling it to chart record high revenue (of RM1.4 bil), operating profit before depreciation, interest and tax (OPBDIT excluding other operating income and forex movements, of RM669.1 mil) and pre-tax profit (of RM532.7 mil). While the Group’s topline remained on an uptrend in 1Q fiscal 2022, heftier operating expenditure kept OPBDIT flattish. That said, its OPBDIT margin was a sturdy 45.6%. Even under our stressed assumptions, we expect TIME’s credit metrics to stay robust. The sukuk rating is nonetheless constrained by the Group’s still small financial footing and market stature.
The evolving technological landscape might present a risk to the Group. The rollout of the 5G network could hinder demand for fixed broadband in the longer term if cellular players are able to offer greater speed and connectivity at lower prices. Overall, we do not expect the criticality of TIME’s fibre network to be impacted overnight.
Analytical contacts
Chu Jia Ying
(603) 3385 2519
jiaying@ram.com.my
Davinder Kaur Gill
(603) 3385 2525
davinder@ram.com.my
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.
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Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.
Published by RAM Rating Services Berhad
© Copyright 2022 by RAM Rating Services Berhad
