This article first appeared in The Edge Financial Daily on July 19, 2018

KUALA LUMPUR: Maxis Bhd’s net profit fell 16.4% to RM478 million in the second financial quarter ended June 30, 2018 (2QFY18) from RM572 million a year ago, on lower revenue. This resulted in lower earnings per share of 6.1 sen for 2QFY18 compared with 7.6 sen for 2QFY17.

Quarterly revenue declined 3.8% to RM2.25 billion from RM2.34 billion in 2QFY17. Service revenue (excluding device, hubbing revenues and network income) also fell 2.7% to RM2.01 billion from RM2.07 billion — Maxis attributed this to a decline in prepaid, offsetting the growth in post-paid and home fibre business.

Nevertheless, the group declared a second interim dividend of five sen per share for the financial year ending Dec 31, 2018 (FY18), payable on Sept 27.

In a statement yesterday, Maxis said post-paid service revenue grew 6.7% year-on-year (y-o-y) to RM1.01 billion in 2QFY18, with post-paid average revenue per user (Arpu) remaining high at RM94.

However, prepaid service revenue declined 13% to RM854 million on a lower subscription base, resulting in an Arpu of RM42.

For the cumulative six months (1HFY18), Maxis’ net profit remained flat at RM1 billion from RM1.07 billion a year ago. Revenue dropped 4.8% to RM4.48 billion from RM4.71 billion in 1HFY17.

The group recorded a 3.7% y-o-y decline in service revenue of RM3.99 billion, due to the decline in prepaid that offset the growth in post-paid and home fibre business.

Nevertheless, average data usage almost doubled to 8.4 gigabyte (GB) per month in 1HFY18 from 4.7GB for 1HFY17.

Maxis said it maintained its network leadership, with the fastest 4G Long-Term Evolution network locally covering 92% of the population.

“We continue to invest significantly in our network. In 2QFY18, we invested RM212 million in capital expenditure (capex), an increase of RM105 million from last quarter (1QFY18),” it said.

“These investments have enabled us to handle the increase in capacity for our customers’ accelerating data usage, while providing the best experience. Our customers’ blended data consumption saw an 18.7% jump to 9GB per month from 1QFY18. This was also supported by an increase in smartphone penetration at 83%.”

Going forward, Maxis said the market is expected to remain competitive.

Maxis chief executive officer Robert Nason said the group will continue focusing on operational efficiencies and invest in sustaining a superior network. “Overall, we feel upbeat about what’s in store for our customers as we create more quality digital experiences for them,” he added.

It is keeping its guidance for FY18 with service revenue and earnings before interest, taxes, depreciation and amortisation to decline by mid-single digits and high-single digits respectively; base capex to be around RM1 billion; and free cash flow is expected to be at a similar level to that in FY17.