Maxis Bhd’s (Maxis) 4QFY22 net profit slumped 17.3% YoY to RM239m, mainly dragged by higher tax cost with effective tax rate jumping from 24.7% in 4QFY21 to 41.6%. Revenue improved by 6.2% as most segments delivered higher contribution i.e. postpaid, prepaid and fibre while cost was largely contained, rising marginally by 2.8% YoY. However, full-year FY22 results came in below expectations at 93% of our and consensus estimates. We attribute this to higher than-expected tax cost due to the presence of Cukai Makmur. In view of rising inflationary pressures, we raise our cost assumption for FY23-24F, resulting in a 4%-5% reduction in our forecasts. Consequently, our TP is revised to RM3.90 from RM4.00 previously. Maintain Neutral on Maxis. A fourth interim dividend of 5 sen per share was declared, bringing total dividend for FY22 to 20sen per share (FY21: 17sen).

• 4QFY22 revenue improved by 6.2% YoY due to higher contribution from prepaid, postpaid and home fibre. Although prepaid subscriber base was down 2.9% YoY, revenue increased by 4% YoY due to higher ARPU (+7% YoY). Postpaid revenue rose by 8.4% YoY, mainly driven by a 7.8% increase in subscriber base on a flattish ARPU. Home fibre, which accounted for 7% of total revenue, posted a 19% jump in revenue.

• 4QFY22 net profit was down 17.3% YoY. Despite the increase in revenue, while operating cost remained largely under control, Maxis posted a 17.3% drop in net profit due to a sharp increase in tax cost with the effective rate rising to 41.7% due to Cukai Makmur. For full-year FY22, effective rate was at 34.8%.

• Delaying 5G network access agreement. Following the government’s announcement that it will be reviewing the rollout of the national 5G network, Maxis has postponed its plan to enter into a wholesale agreement with Digital Nasional Bhd. Previously, Maxis was seeking shareholders’ approval that was scheduled to be finalised in January but the plan has been shelved for now. This means that Maxis customers would have to wait at least until April to be able to enjoy 5G services, as the national 5G implementation policy is only expected to be tabled before the Cabinet by 1Q23.

Source: PublicInvest Research - 24 Feb 2023