MARC Ratings has affirmed its AA+IS rating on EDOTCO Malaysia Sdn Bhd's RM3.0 billion Islamic Medium-Term Notes Programme with a stable outlook.

The rating affirmation continues to reflect EDOTCO Malaysia and its subsidiaries' (collectively EDOTCO Malaysia Group) leading position in Malaysia's telecommunications tower industry and resilient business model, which provides strong cash flow visibility. 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.

As at end-March 2026, EDOTCO Malaysia Group maintained its market leadership with 6,600 towers and 14,933 tenancies. Its tenancy ratio remained healthy at 2.26x, albeit lower than the 2.40x a year earlier, primarily due to tenancy rationalisation arising from a related telco's network integration and modernisation programme. Cumulatively, 427 tenancies have been decommissioned following the exercise of contractual exit rights. Approximately 1,400 tenancies remain under discussion and within their contractual lock-in periods, with potential resolutions including retention, site swaps, new site rollouts and/or Rights of Use (ROU) arrangements. A substantial number of these tenancies are expected to be resolved in 2026.

Despite the ongoing rationalisation exercise, MARC Ratings notes that the group's projections conservatively assume approximately 1,700 tenancy decommissions over 2026?2028, partly offset by built-to-suit and co-location additions from 5G network rollouts and expansion, as well as replacement sites. As the projections exclude potential tenancy retention, site swaps and ROU arrangements, they incorporate some buffer against the eventual outcome of the remaining rationalisation exercise.

Financial performance moderated in 2025, with revenue declining 6.9% y-o-y to RM981.3 million, slightly below the projected RM1.03 billion, mainly due to th