MARC Ratings has affirmed its AAAIS/Stable rating on Celcom Networks Sdn Bhd’s (CNSB) RM5.0 billion Sukuk Murabahah Programme. CNSB is wholly owned by Celcom Berhad, which, in turn, is a wholly-owned subsidiary of CelcomDigi, and provides telecommunications network services across the group.
The rating reflects the credit profile of CNSB’s ultimate shareholder, CelcomDigi, given the strong operational and financial linkages within the group. CelcomDigi’s leading position in the domestic telecommunications industry, sound profitability and robust cash flow generation support the rating, further underpinned by resilient demand for connectivity and favourable industry prospects. Moderating these strengths are competitive pressures on margins and earnings, as well as potential additional funding requirements for Digital Nasional Berhad (DNB).
CelcomDigi maintains a market-leading position, with approximately 20.3 million subscribers and an estimated 41% market share as at end-June 2026. Despite limited subscriber growth and competitive pricing pressures in a mature market, revenue remains supported by resilient demand for connectivity, rising data consumption and an improving customer mix. The substantial completion of the network integration and modernisation programme also positions the group to focus on operational optimisation and realise the remaining merger synergies.
Revenue grew by 2.2% y-o-y to RM13.0 billion in 2025, although EBITDA declined by 5.6% to RM5.47 billion as higher network and traffic costs compressed the EBITDA margin to 42.2% (2024: 45.7%). Nevertheless, EBITDA interest coverage remained strong at 9.6x. Financial performance remained stable in 1H2026, with revenue broadly unchanged y-o-y at RM6.4 billion while the EBITDA margin improved to 43.5% from 42.8%, partly supported by operating cost savings. Further operating efficiencies are expected to partly offset continued competitive and cost pressures. Upon completion of the DNB share transfer, CelcomDigi will equity-account for its share of DNB’s earnings, increasing its exposure to DNB’s financial performance. Overall, MARC Ratings expects the group’s underlying profitability to remain resilient, supported by stable service revenue and further operating efficiencies.
CelcomDigi’s robust cash flow generation remains a key rating strength, with cash flow from operations of RM4.8 billion in 2025 and RM1.5 billion in 1H2026. While sizeable capital expenditure and sustained dividend distributions have moderated deleveraging, the substantial completion of the integration programme and moderating capital expenditure requirements are expected to strengthen free cash flow generation over the medium term. Borrowings increased to RM10.6 billion as at end-June 2026, mainly reflecting investments in DNB and spectrum acquisition. Leverage nevertheless remained manageable, with a debt-to-equity ratio of 0.67x.
DNB-related funding requirements remain the principal uncertainty in CelcomDigi’s cash flow outlook. Cumulative investment in DNB stood at RM879.9 million, with further funding potentially required to support its operations and network expansion. MARC Ratings expects any additional commitments to remain manageable, given CelcomDigi’s resilient cash flow generation, moderating capital expenditure requirements and established access to funding. The group is also expected to maintain sufficient liquidity to meet its debt obligations, including the RM350 million sukuk maturity in October 2026.