Investment Highlights

• We maintain Maxis’ HOLD rating with unchanged forecasts and DCF-derived fair value of RM5.00/share. This is based on a WACC discount rate of 6.3% and terminal growth rate assumption of 2%, which reflects a neutral ESG score of 3 stars. This also implies an FY20F EV/EBITDA of 12x and is on par with its 3-year average.

• Maxis has introduced a new Maxis Family Plan which comes with 4 postpaid lines with unlimited calls and data together with 1 home broadband for RM299/month. The price includes 30Mbps fibre broadband with 4G backup which activates when the fibre line is out of order.

• Based on Maxis Home Fibre plan at RM89/month with speeds of 30mbps, the 4 postpaid lines with unlimited data, calls and SMS translate to only RM52.50/month, 47% lower than RM98/month under MaxisOne Prime’s current RM188 plan.

• Based on an additional 3 shared mobile lines for RM48/month under the current MaxisOne Prime offering, users could save RM92/month or 24% with the same 4 postpaid lines and 30Mbps fibre broadband combo (RM89 for fibre + RM158 for MaxisOne 158 + RM48 x 3 shared lines = RM391/month).

• While attractive for a family of 4, there is no option to reduce the number of supplementary lines. Also, existing customers will incur an early termination fee as current Maxis Postpaid and broadband customers have to sign a new contract by switching to this new family plan.

• For faster data speeds on fibre, subscribers can add RM40/month for 100Mbps, RM60/month for 300Mbps, RM130/month for 500Mbps or RM210/month for 800Mbps. Similar to its existing offers, users can get a Samsung 65″ TV from as low as RM1/month on instalment. For new phones, the plan also allows subscribers to add up to 4 devices on Maxis Zerolution from RM19 per mobile line.

• All in, we are positive on this new plan which could draw in new customers into Maxis’ brand. Recall that Maxis’ overall subscribers continued to rise by 239K QoQ to 11.4mil in 1Q2021 from both prepaid (+172k) postpaid (+67k) segments vs Digi’s 194k overall contraction.

• Blended mobile ARPU slid RM1/month to RM47/month due to the postpaid segment declining to RM76/month from new subscribers at lower entry price. Additionally, the fixed line business maintained momentum with home fibre users rising 21k QoQ to 423k while ARPU rose slightly by RM1/month QoQ to RM108/month.

• The stock’s FY21F EV/EBITDA of 12x is currently on par with its 3-year average while providing a fair dividend yield of 3%.

Source: AmInvest Research - 12 May 2021