Maxis' new strategy aims for service revenue to hit RM10b by 2023

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KUALA LUMPUR (Feb 15): Maxis Bhd's fourth-quarter net profit halved from a year ago, impacted by one-off costs associated with the launch of a new strategy to become a converged communications and digital services company in both the fixed and mobile markets.

Maxis said while these one-off costs had impacted its earnings for the three months ended Dec 31, 2018 (4QFY18), they are important to support its new growth strategy that will set the foundation for the group to become a strong converged player in Malaysia.

The new strategy aims at broadening the group's revenue base to deliver internal service revenue target in excess of RM10 billion by 2023, it added.

"The group has commenced scaling its business to address opportunities in enterprise solutions and converged services across all segments, setting the development path over the next five years," Maxis said in a statement today.

Maxis announced an incremental capital expenditure (capex) of RM1 billion over the next three years to support this new strategy and its five-year internal service revenue target of more than RM10 billion by 2023.

The mobile phone operator posted a net profit of RM266 million in 4QFY18 from RM541 million a year ago. As a result, earnings per share came in lower at 3.4 sen for 4QFY18 compared with 6.9 sen for 4QFY17.

Quarterly service revenue, however, was marginally up at RM2.05 billion compared with RM2.04 billion a year ago. Service revenue is defined as group revenue excluding device, hubbing revenue and network income.

Maxis also declared an interim dividend of 5 sen per share for the financial year ended Dec 31, 2018 (FY18), payable on March 28. This brings total dividends for the year to 20 sen per share.

For the full year FY18, Maxis posted a lower net profit of RM1.78 billion compared with RM2.18 billion in the previous year. Service revenue dipped by 2.5% to RM8.07 billion from RM8.27 billion in FY17. 

“We closed 2018 by maintaining a strong core operating performance. We strengthened our competitive position in the market with some significant moves – we led the market with new affordable home and business fibre plans and grabbed first mover advantage through our fibrenation campaign," said Maxis chief executive officer Robert Nason.

"Our one-off costs in 4QFY18 were a necessary investment in the interest of our customers and for our long-term growth strategy. Overall, we are happy with our results and the substantial progress we have made during the year," he added.

Maxis continued to grow and lead the market in postpaid, with revenue growing by 5.1% year-on-year (y-o-y) to RM4.07 billion from RM3.87 billion. Postpaid average revenue per user (ARPU) stood at RM94 per month for 4QFY18.

The group saw a total of 282,000 new postpaid subscribers added for the year, bringing the total postpaid subscriber base to above 3.1 million. The group attributed the growth to the strong demand for attractive and innovative device and value-accretive share line propositions.

However, prepaid revenue saw an 11.4% y-o-y decline to RM3.4 billion from RM3.84 billion, mainly due to SIM consolidation and migration to postpaid. Prepaid ARPU was at RM42 per month for 4QFY18.

On prospects, Maxis chief operating officer Gökhan Ogut said the challenging times will continue as competition remains intense.

"We are responding well to rapid changes in the market and customer behaviours. We want to continue to lead the market, competing effectively in our core mobile business and expanding into converged offerings and the enterprise segment," he said.

"The foundation of our growth continues to be our differentiated 4G LTE network, in which we amplified our leadership among all networks in Malaysia in terms of speed, performance and experience, as attested by the Malaysian Communications and Multimedia Commission’s recent 2018 Network Performance Report.

"Meanwhile, we will leverage our digital capabilities which we have developed over the last three years to provide an unmatched personalised experience for all our customers,” Ogut added.

Maxis shares ended the morning session up 2 sen or 0.35% at RM5.72 today, with 179,800 shares done, bringing a market capitalisation of RM44.71 billion.