Maxis Bhd’s (Maxis) 3QFY23 net profit was down 6.8% YoY to RM287m due to higher operating cost, particularly staff and resource cost (+43.5% YoY). Meanwhile, revenue grew marginally as the increase in postpaid revenue was offset by lower prepaid revenue and enterprise services. Cumulative 9MFY23 results came in below market expectation at 69% of full-year forecast but within our estimate. Our FY23-25F earnings forecasts remain unchanged. Maintain Neutral on Maxis. A third interim dividend of 4 sen per share was declared, which came in lower than 3QFY22 of 5 sen per share.

• 3QFY23 revenue improved by 1.5% YoY, as the increase in postpaid and home fibre revenue was offset by a decline in prepaid revenue and enterprise services. Postpaid subscriber base increased by 7.7% YoY with ARPU falling by 3.6% to RM70.20. Prepaid customer base was flat but ARPU was down 1.9% to RM30.70. Meanwhile, home fibre’s ARPU held up at RM108.90 on higher home connections of 658k (+16.7% YoY).

• 3QFY23 net profit fell 6.8% YoY to RM287m. Despite the discontinuation of prosperity tax, which led to a 39.4% drop in tax cost, net profit was down 6.8% on the back of an 8.1% increase in total cost. This was in relation to the cost optimisation exercise that resulted in a 43.5% jump in staff cost. EBITDA margin dropped to 38% from 41.7% in 3QFY22.

• Maxis 5G. The group has finally enabled 5G services for its customers in August after signing the access agreement with Digital Nasional Bhd. The new Maxis Postpaid 5G plans offer more data (80GB 4G/5G + Bonus 40GB 5G) for less, provided that customers are not tied to any contracts. Despite the attractive pricing, we do not expect meaningful number of existing users switching over to 5G plans as there is still limited usage for data with most consumption (i.e. online video, gaming, social media content etc) can be readily met with 4G. For 3QFY23, Maxis’ average monthly data usage was approximately 30GB. For now, the penetration rate for 5G services in Malaysia remains low, at only c.7%.

Source: PublicInvest Research - 14 Nov 2023