WIder network: The 800MHz, along with Digi's existing 1,800MHz and 2,600MHz spectrums will enable it to better serve customers who are increasingly consuming video content.
KUALA LUMPUR: Digi.Com Bhd's unit has received the Securities Commission's approval for its proposed RM5bil Sukuk programmes which would be used for capital expenditure and working capital.
The telco said on Tuesday its unit Digi Telecommunications Sdn Bhd would be the issuer of the programmes.
CIMB Investment Bank Bhd is the sole principal adviser, sole lead arranger and lead manager for the Sukuk programmes. The sole Shariah adviser is CIMB Islamic Bank Berhad.
The programmes comprise of an Islamic medium term notes (IMTN) programme of up to RM5bil in nominal value (IMTN programme) and an Islamic commercial papers (ICP) programme of up to RM1bil in nominal value (ICP Programme). The combined limit is up to RM5bil in nominal value.
Digi said the proceeds would be used to finance the capital expenditure, working capital requirements, other general funding requirements and/or general corporate purposes.
The tenure of the IMTN programme is 15 years from the date of the first issuance of IMTN under the IMTN Programme while for the ICP programme, it is seven years from the date of the first issuance of ICP.
Meanwhile, RAM Ratings has assigned respective ratings of AAA/Stable and P1 to Digi Telecommunications proposed RM5bil IMTN Programme (2017/2032) and RM1bil ICP programme (2017/2024), both of which are subject to a combined limit of RM5bil.
Digi.Com is 49%-held by Telenor Asia Pte Ltd, a global telecommunication services provider.
“Digi’s credit profile is anchored by its leading position in Malaysia’s mobile industry and a robust cash-generating aptitude as well as its strong synergistic ties with Telenor ASA (Telenor or the group, Digi’s ultimate parent),” says Davinder Kaur Gill, RAM’s co-head of infrastructure and utilities ratings.
She said the ratings take into account support from Telenor, a Norway-based telecommunication services provider.
Telenor exercises control over strategic decisions of Digi via its appointment of the company’s key management personnel. Accordingly, support from Telenor is deemed highly likely and is readily extended if and when required.
Moreover, Digi’s close relationship with Telenor allows the Company to enjoy economies of scale through coordinated corporate procurement. Digi also benefits from the transfer of technical know-how from Telenor, especially in the areas of operational performance, development of services and technological convergence.
“The company is considered a key long-term investment of Telenor, having accounted for about 10% and 13% of the Group’s revenue and operating profit before depreciation, interest and tax (OPBDIT), respectively, in fiscal 2016,” she added.
Davinder pointed out Digi possesses a strong revenue and cash-generating aptitude.
The company’s adjusted OPBDIT margin has averaged around 45% over the past five years – among the highest in the region.
She also noted that Digi’s total debt increased by RM988mil in fiscal 2016, mainly owing to the payment of upfront spectrum fees.
“Total debt is expected to climb from RM2.3bil currently to RM3.6bil in the next three years, pushing its gearing ratio up from 4.39 times to 6.28 times.
“Nonetheless, our sensitised case shows that the company’s funds from operations debt coverage will remain robust, hovering between about 0.72 and 0.78 times over the same period,” she added.
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