Maxis (HOLD)

• Declared a final single-tier dividend of 9.8 sen per share lifting thetotal dividend for FY11 to 19.6 sen per share.
• TM also proposed capital repayment of 30 sen per share via capitalreduction.
• As expected, Maxis declared a fourth single-tier tax exempt dividend of8 sen per ordinary share along with final single-tier tax exempt dividend of 8sen per ordinary share. The total dividend for FY11 is 40 sen per ordinaryshare.
• Without the tax incentive, FY11 would have been a bad year for theincumbent telco with PBT suffering with contraction of 4% yoy and 9% qoq.
• Comments: Weexpect fibre broadband competition to intensify this year, especially ahead ofP1's similar offering coming on shelf. While we do not expect Maxis to engagein price war which will hurt ARPU in the longer term, it is likely to enhanceproducts offering (increase speed) and VAS bundling.
• Our DDM-derived TP was upgraded by 7% to RM5.93 from RM5.54 as WACC waslowered to 7% from 7.5% as a result of increased debt to total capital ratio.