• Maxis has ultimately chosen to enter Access Agreement (AA) with Digital Nasional Berhad (DNB)

• We anticipate more stable earnings growth in the long run, driven by the improvement of 5G-related products

• Note that Maxis’s network is 5G ready

• Maintain a HOLD call with a TP of RM3.95. Our valuation is derived based on DCF valuation with a WACC of 8.0% and a longterm growth of 1.0%

Another milestone for Maxis

Based on Bursa announcement dated 14th July 2022, Maxis has announced that the group has finally commits to executing 5G Access Agreement (AA) with Digital Nasional Bhd (DNB) after lengthy delay. Subject to shareholders' approval, Maxis intends to strengthen its position as a telecommunications market leader by leveraging its entry into AA with DNB. This strategic move will empower Maxis to deliver state-of-the-art 5G services to its customers, thereby catering to the growing demand for data and addressing the changing connectivity requirements of both individuals and businesses. The AA incorporates the terms and conditions specified in DNB's reference access offer, underscoring Maxis' commitment to enhancing customer experience and embracing the advancements brought about by 5G technology. Note that Maxis is anticipated to execute the AA once it secures approval from its shareholders at the Extraordinary General Meeting (EGM) scheduled to be convened in 3Q023.

Positive on the deal

Maxis had previously mentioned the extended 10-year duration as a contributing factor to the delay in reaching an agreement. We maintain a favourable stance on both the deal and the prospects for the company's advancements in 5G technology. We anticipate more stable earnings growth in the long run, driven by the improvement of 5G-related products. Additionally, it is worth noting that Maxis' 4G network is already equipped for 5G technology. Looking ahead, we do foresee an increase in capital expenditure due to investments in 5G infrastructure and other 5G related products. We foresee a relatively flat earnings growth and remain concerned about Maxis' near-term outlook given its challenging financial performance. Note that that management has guided for the group's FY23 service revenue growth to be in the range of flat to low single digits, with EBITDA and capex similar to FY22.

Maintain a HOLD with Unchanged TP RM3.95

Maintain a HOLD call with a TP of RM3.95. Our valuation is derived based on DCF valuation with a WACC of 8.0% and a long-term growth of 1.0%.

Source: BIMB Securities Research - 17 Jul 2023