Maxis 4Q earnings jump on strong postpaid growth

by SHAZNI ONG / pic by TMR FILE PIX

MAXIS Bhd’s earnings for the final quarter jumped more than a third contributed by strong postpaid growth, high and stable mobile average revenue per user (ARPU), as well as consistent growth in fibre subscriptions in both consumer and enterprise segment.

The telecommunication service provider’s net profit jumped 33.46% year-on-year (YoY) to RM355 million in the fourth quarter ended Dec 31, 2019 (4Q19), while revenue rose 5.93% YoY to RM2.59 billion and earnings per share for the period was 4.5 sen.

Backed by strong operating free cashflow, Maxis declared a fourth interim single-tier tax-exempt dividend of five sen net per share, payable on April 16, 2020, bringing its annual dividend to 20 sen.

During the quarter, Maxis continued its leadership in postpaid with a high monthly ARPU and an increase in postpaid subscribers by 140,000, which brought total net additions to 432,000 for the year.

“This is driven by positive traction of both Hotlink Postpaid Flex and MaxisONE plans. Underpinning these worry-free propositions was its leading 4G network, which continued to deliver more than 3Mbps 95% of the time in a demanding environment of increasing data usage,” the company said in its exchange filing yesterday.

CEO Gökhan Ogut said the strong 4Q was due to its continued leadership in its core mobile business while making strong progress towards its convergence ambition.

“The year saw us expanding our enterprise team and building solid partnerships with the best in the industry to deliver more value to businesses in Malaysia,” he said in a separate statement.

In line with the government’s National Fiberisation and Connectivity Plan (NFCP) ambitions, Ogut noted that Maxis has been aggressively expanding its fixed services footprint and building a strong home-fibre customer base.

“Our keen focus on delivering unmatched personalised experiences has resulted in high customer satisfaction levels for the year.

“Always at the forefront of technology, we are accelerating 5G and ready to deploy as soon as the spectrum is made available,” he said.

For the full year, its net profit fell 14.66% YoY to RM1.52 billion as revenue grew marginally by 1.32% YoY to RM9.31 billion.

On prospects for the financial year ending Dec 31, 2020 (FY20), Maxis said it continues to focus on its long-term ambition, being leading converged solutions company, leveraging on its strong 4G/LTE network and expanding its presence in the fixed broadband market in both consumer and enter

prise, together with expansion of business solution offerings.

“In the mobile market, we will focus on building upon our core offerings in the consumer and enterprise segments with innovative new products, services and business solutions.

“‘The group entered into a strategic partnership with Measat — selling Maxis Fibre and Astro TV, and the early results in FY19 are encouraging for FY20.

“In the fixed-broadband market we will focus on executing our established access agreements with access providers, providing new innovative solutions to both consumer and enterprise customers, and increased packing of valueadded services,” it said.

Notwithstanding the strong fundamentals in its core mobile business, Maxis said there are a few key items impacting the group’s performance in FY20.

This includes the regulated change in the mobile termination rates from Jan 1, 2020, that will adversely affect prepaid and postpaid ARPU, and increasing depreciation due to increased capital expenditure (capex) in FY19.

Following that, Maxis said its guidance for FY20 include service revenue and Ebitda to be flat to a low single-digit increase, core network capex to be around RM1 billion-plus capex supporting new growth opportunities in broadband and enterprise business and operating free cashflow at a similar level to FY19.

AmInvestment Bank Bhd in a note yesterday, maintained its ‘Hold’ call on Maxis with an unchanged discounted cashflow-derived fair value of RM5.76 per share.

Maxis’ shares closed 0.56% or three sen higher at RM5.40 yesterday, valuing the company at RM42.23 billion.