MARC Ratings has affirmed Tenaga Nasional Berhad’s (TNB) corporate credit rating at AAA with a stable outlook.

TNB’s strong credit profile reflects its monopoly over electricity transmission in Peninsular Malaysia and Sabah, its leading position in power generation and distribution, and the supportive Incentive-Based Regulation framework, which facilitates fuel cost recovery and provides regulated returns on capital expenditure. The rating also incorporates a two-notch uplift, reflecting TNB’s strategic importance to national energy security and the government’s strong track record of support through grants and subsidy reimbursements.

Revenue grew 19.4% to RM67.7 billion in 2025, driven by a 2.6% increase in electricity demand and higher tariffs under Regulatory Period 4 (RP4, 2025–2027). The approved RP4 base tariff of 45.40 sen/kWh was 13.6% higher than that under RP3 (2022–2024). Revenue rose a further 7.5% y-o-y to RM35.3 billion in 1H2026, alongside a 7.7% increase in electricity demand, mainly from the commercial and domestic segments. Demand growth continues to benefit from Malaysia’s expanding data centre industry. Between January 2025 and end of June 2026, TNB energised 24 data centre projects, bringing the cumulative total to 42 of 61 secured projects, representing approximately 5.65GW of the total committed load of 8.35GW.

Cash flow from operations (CFO) declined to RM15.8 billion in 2025, mainly due to RM6.3 billion of additional tax payments relating to historical tax assessments. The tax matter was fully resolved during the year following approval of TNB’s Schedule 7B investment allowance application. CFO subsequently stood at RM12.0 billion in 1H2026. Liquidity remained healthy, with cash of RM15.3 billion as at end of June 2026.

TNB is expected to undertake significant capital expenditure over the medium term to expand and modernise its transmission and distribution networks, invest in generation capacity to meet rising electricity demand, and support Malaysia’s net-zero transition. As at end of June 2026, borrowings stood at RM60.9 billion, while the debt-to-equity ratio increased to 1.14x, mainly due to a lower equity base following the retrospective tax restatement. Nonetheless, debt-to-OPBITDA remained healthy at 2.83x. Despite the sizeable capex programme and expected increase in borrowings, leverage should remain manageable, supported by strong internal cash generation and scheduled debt amortisation.