• Overview. 4Q19 core profit dipped 32.4% yoy and 4.7% qoq on higher direct cost charged (network, traffic and O&M charges). This has led to lower core EBITDA in 4Q19.
• Key highlights. Service revenue fell 2.7% yoy largely contributed by termination of a network sharing in 4Q18. ARPU for postpaid decreased to RM90 from RM96 (4Q18) despite a strong growth in subscription base. This was due to product mix and change in the Mobile Termination Rates (MTR).
• Against estimates: inline. FY19 core profit of RM1,542m was inline with our and consensus estimates at 97% and 100% respectively.
• Dividend. A fourth interim DPS of 5.0 sen was declared, implying 110% payout. This brings FY19 DPS to 20 sen (FY18: 20 sen).
• Outlook. Maxis will remain focused on growing its presence in the fixed broadband market for consumer and enterprise, together with expansion of business solutions offerings.
• Our call. HOLD with a RM5.00 DCF-derived TP. Despite management’s optimistic view on its strong fundamental in core mobile business for FY20, we believe that intense competition among telco providers, coupled with regulatory risk (ie. Mobile termination rate) may exert downside pressure on earnings

Source: BIMB Securities Research - 21 Feb 2020