Maxis; Fully Valued; RM6.99
Price Target: RM5.65; MAXIS MK

Maxis Bhd released a new shared data service named Share’n’Surf, with a structure similar to U-Mobile’s Internet Shared Plan. This is also almost identical to its existing Multi-Sim 1 add-on, down to the requirements (e.g. needs a minimum 2GB Mobile Internet Plan, registration limit of 6 sim cards etc). According to the Share’n’Surf plan, every additional sim card attached to the internet bucket incurs an additional RM15/month, and will consume data from the primary line’s quota (Maxis’ SurfMore 50 and 75 plans). Maxis has also added a supplementary plan to its SurfMore data brand at RM30/month for a 1GB quota, as well as including cheaper quota upgrade passes.

We think the shared service is likely to be a measure aimed at reducing churn than to increase ARPU via subscriber retention, as this could result in lower revenues in the form of merged subscriptions (e.g. existing subscribers cancelling their tablet plans to opt for the Share’n’Surf platform). In addition, the devices covered under this plan does not seem to include postpaid wireless broadband, which tend to take up more bandwidth. The lower-priced quota upgrade passes are effectively a price reduction (RM15 for 1GB compared to the usual RM48 for 1GB), though this could drive higher data volume consumption as users pile more devices into the shared service.

Maxis still possesses the most expensive valuation in the sector, with average earnings growth opportunities in light of underrated voice and SMS revenues offsetting strong data usage. Further, cost controls will still be a continuing theme to preserve EBITDA margins in the near-term. New incoming CEO Morten Lundal is also unlikely to rock the boat, as strategies to turnaround the giant are already underway. Maintain FULLY VALUED and RM5.65 price target.

Source: HwangDBS Research - 19 Sep 2013