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RAM Ratings affirms TM Tech
Published on 08 Jul 2025.
RAM Ratings has affirmed the AAA/stable and P1 ratings of TM Technology Services Sdn Bhd’s (TM Tech) sukuk:
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A wholly-owned subsidiary of Telekom Malaysia Berhad (TM or the Group), TM Tech houses the Group’s core businesses and is the Group’s main earnings contributor. Given the inextricable financial and operational linkages between TM Tech and TM, RAM views them in aggregate from a rating perspective. Accordingly, the ratings of TM Tech’s sukuk are reflective of the Group’s robust credit standing.
On a stand-alone basis, the ratings are anchored by the Group’s continued dominance in the Malaysian broadband services space, backed by its extensive fiber network. Its superior profitability and robust credit metrics are key supporting factors. The ratings also consider TM’s critical role as the national provider of telecommunications and digital infrastructure and their very strong relationship with the Malaysian Government under RAM’s methodology for rating government-linked entities.
TM leads the retail fixed broadband space, capturing an estimated 66% subscriber market share as of end-2024. Despite a competitive market, its subscriber base came up to 3.2 mil for 1Q 2025, with the average revenue per user registering at RM127 per month, higher than rated peers’. Complementing the broadband segment are the Group’s business-to-business segment (under TM One) and carrier-to-carrier division (led by TM Global), which collectively account for half of its top line.
Overall, TM’s revenue and operating profit before depreciation, interest and tax (OPBDIT) were largely flattish at RM11.71 bil and RM4.28 bil for FY Dec 2024. Amid strong cashflow generation and undemanding capital expenditure, TM continued to deleverage, seeing its gearing and annualised OPBDIT debt cover reach record levels at 0.51 times (as at end-March 2025) and about 0.83 times for 1Q FY Dec 2025. These metrics remained solid even after adjusting for RAM’s analytical treatment of financial leases, standing at 0.39 times and about 1 time, respectively.
Demand for connectivity and digitalisation will rise in tandem with the proliferation of successful data-driven industry use cases (and 5G adoption), providing impetus for TM’s growth. That said, competition in the technological landscape is rife with telecommunication players attempting to stamp their relevance through bundled connectivity and solutions-based offerings, which may dampen margins. Going forward, TM will continue to strengthen its core businesses while expanding into new areas to boost revenue and earnings.
Analytical contacts
Karin Koh, CFA
(603) 2708 8237
karin@ram.com.my
Davinder Kaur Gill
(603) 2708 8220
davinder@ram.com.my
Media contacts
Sakinah Arifin
(603) 2702 8212
sakinah@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.
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 2025 by RAM Rating Services Berhad
