MARC Ratings has affirmed its ratings of MARC-1IS /AAIS on Cellco Capital Berhad’s (Cellco) RM520 million Issue 1 under its Islamic Commercial Papers/ Islamic Medium-Term Notes Programme (Sukuk Ijarah) with a combined limit of up to RM1.0 billion. The long-term rating outlook is stable.
Cellco is a special-purpose vehicle established to raise funds under the Sukuk Ijarah Programme for Stealth Solutions Sdn Bhd (Stealth), an independent tower company and the originator of the sukuk. Obligations under Issue 1 are supported by lease payments from 531 operational telco towers.
The ratings reflect stable, predictable cash flow from long-term leases with major telcos, safeguarded through Security Trustee-controlled accounts that ring-fence the transaction and prevent fund commingling. The average remaining contract life is 6.2 years (excluding renewals). Strong liquidity and steady operating cash flow provide ample covenant headroom. Under the sensitised case, applying stresses on tenancy growth and margins, average and minimum finance service cover ratio are projected at 1.98x and 1.50x through FY2030.
As at end-September 2025, Stealth’s tower and tenant counts remained largely unchanged from the previous year at 547 and 925, with a stable tenancy ratio of 1.7x. While Cellco is exposed to some customer concentration risk due to the domestic telco market’s oligopolistic structure, this risk is not considered material. Renewal risk is assessed as low, given that towers constitute mission-critical infrastructure for telcos and that high switching costs and the risk of service disruption discourage relocation.
Stealth leases its tower sites from third-party landowners under agreements shorter than its tower leases, exposing it to moderate renewal risk, mitigated by a strong renewal history and diversified landowner base.