Monday, Nov 14, 2005
MARC has assigned the rating of AAAIS to Sacofa Sdn Bhd’s (SACOFA) and Sarawak Gateway Sdn Bhd’s (Sarawak Gateway) RM160.0 million Sukuk Istisna’ and RM240.0 million Sukuk Ijarah respectively. The strong ratings reflect, amongst others, SACOFA’s exclusive rights to construct, own and manage the telecommunication towers and structures in the State of Sarawak; the licensing agreement entered into with creditworthy telecommunication companies (telcos); and, shareholding and backing by the State Government of Sarawak (SGS)
SACOFA was formed under the SGS’s initiative with the purpose of providing the telecommunication infrastructure and monitoring the growth of telecommunication facilities in the State of Sarawak. SACOFA is also involved in operating the submarine cable network that links East Malaysia and West Malaysia through its landing stations in Buntal, Kuching and Mersing, Johor as well as the onland fibre optic network system throughout the State of Sarawak. Sarawak Gateway is a special purpose subsidiary of SACOFA to facilitate the issuance of the proposed Sukuk Ijarah. The purposes of the issuance are for refinancing of existing borrowings, funding the construction of telecommunication towers and acquisition of existing towers.
SACOFA was granted a 20-year concession to build and operate telecommunication towers in Sarawak by the SGS in 2002. The agreement entitles SACOFA the exclusive right to erect and maintain telecommunication towers under a build and operate concept, and to lease, rent or grant licenses over such towers. To facilitate SACOFA in implementing its tasks, it was given the “deemed native” status whereby it is the only entity allowed to acquire native land in the State for the construction of telecommunication facilities. SACOFA has entered into a Master Licensing Agreement with telcos in June 2005 for Time Two (T2) programme initiated by Malaysian Communication and Multimedia Commission (MCMC) and individual license agreements with respective telcos for programmes outside the T2 whereby SACOFA is entrusted to serve appropriate sites, commission the construction of towers and grant the telcos the right to use the towers on a sharing basis.
SACOFA’s major revenue contributors are building and the operation of towers whilst its other revenue contributors include its involvement in the submarine cable and onland fibre optic network.
Construction risk is considered minimal, mainly applicable to construction of towers as existing infrastructure in respect of the submarine cables and onland fibre optic cables are already in place.
Under the issue structure of the proposed Sukuk Istisna’, all payments due from the lease of telecommunication towers and bandwith from its fibre optic network shall be utilised towards the redemption of the primary and secondary notes. Similarly, all Ijarah rentals under the proposed Sukuk Ijarah have been earmarked for redemption of profit payments. Such priority of payments mitigates the liquidity risk as payments for operating and administrative expenses would only be made after all obligations under the proposed facilities, in the respective financial period, are fulfilled.
During the tenure of the proposed facilities, SACOFA’s average operating and net profit margins are projected to be sufficiently comfortable to accommodate the debt burden to be borne by the company.
SACOFA was formed under the SGS’s initiative with the purpose of providing the telecommunication infrastructure and monitoring the growth of telecommunication facilities in the State of Sarawak. SACOFA is also involved in operating the submarine cable network that links East Malaysia and West Malaysia through its landing stations in Buntal, Kuching and Mersing, Johor as well as the onland fibre optic network system throughout the State of Sarawak. Sarawak Gateway is a special purpose subsidiary of SACOFA to facilitate the issuance of the proposed Sukuk Ijarah. The purposes of the issuance are for refinancing of existing borrowings, funding the construction of telecommunication towers and acquisition of existing towers.
SACOFA was granted a 20-year concession to build and operate telecommunication towers in Sarawak by the SGS in 2002. The agreement entitles SACOFA the exclusive right to erect and maintain telecommunication towers under a build and operate concept, and to lease, rent or grant licenses over such towers. To facilitate SACOFA in implementing its tasks, it was given the “deemed native” status whereby it is the only entity allowed to acquire native land in the State for the construction of telecommunication facilities. SACOFA has entered into a Master Licensing Agreement with telcos in June 2005 for Time Two (T2) programme initiated by Malaysian Communication and Multimedia Commission (MCMC) and individual license agreements with respective telcos for programmes outside the T2 whereby SACOFA is entrusted to serve appropriate sites, commission the construction of towers and grant the telcos the right to use the towers on a sharing basis.
SACOFA’s major revenue contributors are building and the operation of towers whilst its other revenue contributors include its involvement in the submarine cable and onland fibre optic network.
Construction risk is considered minimal, mainly applicable to construction of towers as existing infrastructure in respect of the submarine cables and onland fibre optic cables are already in place.
Under the issue structure of the proposed Sukuk Istisna’, all payments due from the lease of telecommunication towers and bandwith from its fibre optic network shall be utilised towards the redemption of the primary and secondary notes. Similarly, all Ijarah rentals under the proposed Sukuk Ijarah have been earmarked for redemption of profit payments. Such priority of payments mitigates the liquidity risk as payments for operating and administrative expenses would only be made after all obligations under the proposed facilities, in the respective financial period, are fulfilled.
During the tenure of the proposed facilities, SACOFA’s average operating and net profit margins are projected to be sufficiently comfortable to accommodate the debt burden to be borne by the company.