KUALA LUMPUR: MARC Ratings has affirmed its AA+IS rating on Edotco Malaysia Sdn Bhd's RM3bil Islamic Medium-Term Notes Programme with a stable outlook.
The rating agency said the affirmation reflected Edotco Malaysia's leading position in the local telecommunications tower industry and its resilient business model, which provides stable cash flow.
“As the country’s largest independent tower company, the group is well positioned to benefit from sustained growth in mobile data usage, ongoing 5G deployment and government-led digital connectivity initiatives,” MARC Ratings said.
As at end-March 2026, Edotco Malaysia operated 6,600 towers with 14,933 tenancies.
Its tenancy ratio declined to 2.26 times from 2.40 times a year earlier, mainly due to network integration and modernisation undertaken by a related telecommunications company.
MARC Ratings said 427 tenancies had been discontinued, while about 1,400 remained under discussion.
The group expects a substantial number of these tenancies to be resolved this year through retention, site swaps, new site rollouts or Rights of Use arrangements.
For 2025, Edotco Malaysia's revenue fell 6.9% year-on-year to RM981.3mil, mainly due to a lower tenancy base.
Despite the decline, its earnings before interest, taxes, depreciation and amortisation (Ebitda) margin remained strong at 68.4%, while operating cash flow stood at RM526.9mil.
Revenue for the first quarter of 2026 declined 3% to RM220mil, partly due to the group's gradual exit from the managed services business.
However, its Ebitda margin remained at 67.3%.
Looking ahead, MARC Ratings expects annual revenue to range between RM966.2mil and RM1.04bil from 2026 to 2029, with Ebitda margins projected at around 72%.
The revised revenue forecast is lower than its previous projection of RM1.08bil to RM1.16bil.
MARC Ratings said growth prospects would continue to be supported by 5G network expansion, while potential contributions from JENDELA Phase 2 would depend on the final project award and scope.
Meanwhile, borrowings are projected to remain between RM1.2bil and RM1.3bil, reflecting higher expected sukuk drawdowns.
Nevertheless, MARC Ratings expects the group's debt levels to remain manageable, with its debt-to-Ebitda ratio projected at between 1.63 times and 1.89 times.
Even under a weaker earnings scenario, the ratio is expected to remain below the four times covenant threshold.
