Period

2Q15/1H15

1Q15 core PATAMI of RM936m (-6.2% YoY) came in largely within our and the street expectations, at 48.3% and 47.8% of full-year forecasts, respectively. Overall, the 1H15 performance (on a YoY basis) was driven by higher service revenue but marginally offset by: (i) lower EBITDA margin, (ii) higher accelerated depreciation charges associated with the network modernisation programme, and (iii) prepaid GST freebies (by giving additional value in the form of free minutes and text messages for three months) impact of c.RM50m in 2Q15.

Dividends

Declared a single-tier tax-exempt dividend of 5.0 sen, of which the ex-date has been set at 26 August. For the full financial year, we expect a total of 21.5 sen dividend, implying a dividend yield of 3.3%. 

Key Results Highlights

YoY, revenue climbed by 1.4% to RM4.26b in 1H15 due to higher services revenue (+3.3% to RM4.2b) but partially offset by lower non-services revenue (i.e. device and hubbing business). The higher services revenue was primarily due to the continued uptrend in prepaid and stable postpaid revenue. Normalised EBITDA, meanwhile, inched higher by 0.5% to RM2.1b with margin relatively stable at 50.4% (vs. 50.9% in 1H14).

QoQ, turnover was lower by 1.8%, no thanks to the lower prepaid revenue (-3.5%) as a result of the GST freebies' impact of c.RM50m. The group’s normalised EBITDA has strengthened by 5.2% to RM1.1b with improved margin of 52.2% (vs. 48.7% in 1Q15) as a result of lower quantum of foreign exchange losses (RM4m vs. c.RM40m in the previous quarter). Its core PATAMI (after adding back the accelerated depreciation of RM42m (vs. RM43m in 1Q15)), meanwhile, advanced by 6.6% to RM483m, in line with higher EBITDA.

Maxis recorded a total of 49k subscribers net adds in 2Q15, bringing its total subscriber base to 12.2m (under the revenue generating subscribers for more than 30-day definitions). The higher subscriber net adds was mainly led by the prepaid segment (76k, driven by the group’s worry-free propositions and free social chat packages) but offset by lower subscription in the postpaid segment (-27k).

ARPU-wise, prepaid weakened by RM2 to RM36 while postpaid declined RM1 to RM98. Having said that, its MaxisONE Plan continued to gain traction with subscriber base currently at 434k (vs. 350k in 1Q15) with stable ARPU of c.RM150 vs. mid-RM90 in the legacy plans. 

Its blended smartphone penetration rate improved to 65% (vs. 62% in 1Q15) with 73% recorded in the postpaid segment and 63% in the prepaid. LTE network population coverage has widened to 41% (from 20% a year ago) while its 2G & 3G modernisation plan has achieved 81% vs. 64% in 2Q14.