RAM Ratings affirms Digitel’s AAA/Stable/P1 sukuk ratings

Published on 17 Nov 2023.

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RAM Ratings has affirmed the respective AAA/Stable and P1 ratings of Digi Telecommunications Sdn Bhd’s (Digitel or the Company) RM5 bil Islamic Medium-Term Notes Programme (2017/-) and RM1 bil Islamic Commercial Papers (2017/2024). The facilities are subject to a combined limit of RM5 bil.

The completion of the merger between Celcom Berhad (Celcom, formerly known as Celcom Axiata Berhad) and Digi.Com Berhad on 30 November 2022, formed CelcomDigi Berhad (CelcomDigi or the Group, formerly known as Digi.Com Berhad). The Group is more indebted post-merger, but its credit metrics are still largely within AAA-threshold. CelcomDigi now holds a leading position in the domestic telecommunications services industry, from a subscriber, revenue and earnings perspective. Coupled with CelcomDigi’s superior profitability and continued strong cashflows, the Group’s enlarged scale and leading position as the country's largest mobile telecommunications group anchors the Group’s credit strength. 

Digitel is a wholly-owned subsidiary of CelcomDigi and currently hosts Digi’s division of the business and operations. Nonetheless, with the merger, the Group’s strategies and operations have become increasingly integrated with a unified network as well as new products launches under a new corporate brand. Overall, we view Digitel, Celcom and the broader CelcomDigi in aggregate from a rating perspective.

CelcomDigi’s top line grew marginally to RM6.3 bil in 1H FY Dec 2023 (1H FY Dec 2022: RM6.1bil1) primarily driven by non-service-based revenue. While the Group’s debt level rose post-merger, we expect the Group’s financial metrics to remain within AAA rating thresholds, despite some earnings and profitability dilution from integration costs. 

CelcomDigi has experienced a smooth amalgamation thus far. The Group expects to deliver total Net Synergies of RM8 bil (NPV) over 5 years, emanating from network, information technology (IT) and others. We believe these will serve to augment its profitability metrics. Its full-scale integration and modernisation of networks involves almost 24,000 existing Celcom’s and Digi’s sites nationwide. The Group's recent unveiling of a new corporate brand signified a significant milestone of the integration of the two entities. CelcomDigi is on track to fulfil its merger-related undertakings with the Malaysian Communications and Multimedia Commission (MCMC) as planned.

As the merger is a complex effort, effective planning, execution and tracking across business processes and strategies are critical in ensuring synergy targets are delivered on time. We believe that efficiency gains – if well managed – will provide the foundation for structural improvements in the longer run. 

The longer-term prospects for the telecommunications industry hinge on the rollout and adoption of 5G, as it is touted as the next technological advancement to turnaround stagnating earnings growth for the sector. Stronger demand for data and digitalisation via 5G is a boon, but any resultant earnings uplift is likely to be seen only in the medium term. 

1 Comparable basis which includes contribution from Celcom's results as if the merger was completed on 1 January 2022 and after excluding merger transaction costs and accounting alignment adjustments.


Analytical contacts
Ho Chian Leng, CFA
(603) 3385 2527

Davinder Kaur Gill
(603) 3385 2525

Media contact
Sakinah Arifin
(603) 3385 2500


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.

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