KUALA LUMPUR: Media Prima Bhd has allocated RM100mil to RM120mil as capital expenditure (capex) per annum for the next three years, according to RAM Rating Services Bhd.
It said on Monday the capex was to continue replacing its broadcasting and transmission equipment in progress to be digital-TV ready.
"This is anticipated to be funded via internal cash, without requiring debt funding. As such, the group's balance sheet is expected to stay sturdy," it said.
RAM Ratings reaffirmed the AAA(bg) rating of Media Prima's RM170mil bank-guaranteed medium-term notes programme (2007/2012) (BG MTN), with a stable outlook.
It also reaffirmed the P1 rating of the group's RM180mil commercial papers programme (2007/2014).
It said the enhanced rating of the BG MTN reflects the unconditional and irrevocable guarantee extended by MALAYAN BANKING BHD, which enhances the credit profile of the debt issue beyond Media Prima's inherent or stand-alone credit position.
Media Prima's stand-alone credit profile and P1 rating reflect its strong market position in the media industry, as well as its solid financial profile.
To recap, the highly diversified group has interests in a broad spectrum of media such as free-to-air television (TV) broadcasting, newspaper publication, radio broadcasting, outdoor advertising, and content creation and online portals, and continues to lead in almost every media sub-segment it operates in.
RAM Ratings also said Media Prima's adjusted gearing ratio had eased to 0.45 times as at end-FYE Dec 31, 2011 (FY Dec 31, 2010: 0.55 times). Its adjusted funds from operations debt cover (FFODC) also strengthened to 0.59 times (FY Dec 31, 2010: 0.52 times) mainly due to the lower debt level.
The ratings agency said however, Media Prima was susceptible to economic cycles, newsprint price movements and intense competition within the media sector, particularly from other major media groups such as Star Publications (M) Bhd, ASTRO All Asia Networks Plc and Radio Television Malaysia.
"The competitive backdrop is further exacerbated by the emergence of more new media platforms such as online news portals and new channels via broadband-based TV services, such as UniFi and Yes, over the last few years.
"This year, the prospective debut of YTL Communications Sdn Bhd's hybrid-TV service, new entrant Asian Broadcasting Network (M) Sdn Bhd's pay-TV service and Maxis Bhd's Internet-portal TV service is set to widen advertisers' choices further.
“To keep up with the competition, Media Prima has to continuously invest in quality content," said RAM Ratings' head of consumer & industrial ratings Kevin Lim.
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