Maxis Bhd; Fully Valued
Price Target: RM5.45; MAXIS MK

Maxis Bhd released a statement that LTE access has been enabled on its Apple devices (iPhone5, iPad with Retina Display, iPad Mini) via a software update, which would now allow up to 100k customers access to 4G LTE (including those using the Nokia Lumia 920 and HTC One XL). The company also said that it would expand LTE coverage to more areas in the Klang Valley, Johor Baru and Penang by 3Q2013. In addition, a Malaysian telecoms news site reported that 4G LTE on the idevices are currently using 1800MHz spectrum but has not been confirmed officially (we note that idevices may be used on 1800 or 2100MHz bands, which Maxis has).

Overall, this is positive for Maxis, in that LTE-compatible handset availability is now improving, which would improve LTE takeup in the near term. The reported usage of the 1800MHz spectrum band for LTE is also positive in that LTE network coverage expansion would be achieved at much lower cost than expected (the market has assumed that the 2600MHz band would be used). Maxis would likely see first-mover advantages in the higher-end segment, as Celcom is still in the midst of test-driving their LTE products and have not yet released them publically. However, postpaid price plans for Maxis are still relatively more expensive than its competitors, and may not see a huge uptick in net adds given a market that we think is hungry for low priced, value-based products instead of speed. Moreover, lack of scale on Maxis’ HSBB segment is still a drag on earnings, and would take time to become earnings accretive.

Source: HwangDBS Research - 10 Apr 2013