Maxis 2Q19 net profit down 16.9% on lower service revenue

By NG MIN SHEN / Pic By TMR File

TMAXIS Bhd identified weaker service revenue in the absence of network sharing agreement, and lower prepaid and postpaid revenue saw its net profit fall 16.9% to RM397 million in the second quarter ended June 30, 2019 (2Q19), from RM478 million reported in 2Q18.

The telecommunications company (telco) stated its 2Q19 service revenue slipped 4.7% year-on-year (YoY) to RM1.92 billion while service revenue excluding wholesale revenue slid 0.7% YoY to RM1.89 billion.

“This was largely contributed by the termination of a network sharing agreement, decline in prepaid revenue-generating subscribers, and overall reduction in prepaid and postpaid average revenue per user (ARPU), offset by the growth in postpaid and Maxis Home Fibre subscribers,” Maxis said in an exchange filing last Friday.

Quarterly revenue was 1.8% lower at RM2.21 billion compared to RM2.25 billion registered a year earlier.

Normalised earnings before interest, tax, depreciation and amortisation (Ebitda) fell 6% to RM947 million in 2Q19 from RM1.01 billion previously, bringing normalised Ebitda margin on service revenue to 49.4% versus 50% in 2Q18.

The group declared a second interim dividend of five sen per share, to be paid on Sept 26, 2019. This brings the telco’s total dividend for the first half of 2019 to 10 sen.

Postpaid service revenue for 2Q19 decreased 3.7% to RM972 million from RM1.01 billion last year, although postpaid subscribers expanded 10.8% to 3.1 million users from 2.8 million subscribers in 2Q18.

“Hotline Postpaid Flex and Maxis-ONE Share continue to be strong catalysts driving incremental port-ins of entry-level postpaid subscribers,” the telco said.

Postpaid ARPU narrowed to RM91 in 2Q19 from RM96 last year, largely due to the change in mobile termination rates and ARPU dilution from Hotline Postpaid Flex offerings.

Prepaid service revenue declined 7.4% YoY to RM791 million in the 2Q this year due to a smaller subscription base due to continued SIM consolidation, migration from prepaid to postpaid, and reduced mobile termination rates.

The telco lost 330,000 subscribers in its prepaid base, bringing prepaid users to 6.42 million in 2Q19 from 6.75 million in the same quarter last year.

Prepaid ARPU was unchanged YoY at RM41. The group’s blended ARPU was also maintained at RM57.

Capital expenditure for the 2Q was higher at RM267 million versus RM212 million in 2Q18, mainly due to incremental investment for growth in the telco’s Home Fibre and Enterprise segments.

Operating free cashflow was larger at RM1.02 billion against RM931 million last year, driven by improved working capital management and productivity programmes delivering results.

In a separate statement, the telco said it is “on track to deliver on guidance for the year”, with its convergence strategy mobilised and gaining momentum towards its next phase of growth.

“We are making very good progress in executing our five-year growth plan to be Malaysia’s leading converged communications and digital services company, while maintaining our leadership in our core mobile business,” Maxis CEO Gokhan Ogut said.

5G, the next generation of cellular network technology, continues to be a key focus for the telco, which sees tremendous potential for 5G in a future of smart solutions.

“To this end, our 5G live trials are progressing well. We continue to be at the forefront of introducing new technologies to Malaysia,” Ogut noted in a release last Friday.