We set out below the key highlights from yesterday’s group luncheon hosted by Maxis with Joint COO, Nasution Mohamed. We think that the refined organisational structure unveiled by Maxis on 10 June is positive if it means a leaner and flatter Maxis. Apart from that, we gather Maxis is on a lookout for a CFO too. Maintain NEUTRAL.  
 
- Toward a leaner and flatter Maxis.  We think that the refined organisational structure unveiled by Maxis on 10 June is positive for a mobile-centric company that has grown significantly over the years but perhaps suffered from some duplication as fixed line services became a small but growing part of the group.  

- The new structure comprising Enterprise Solutions, Consumer Business, Sales & Services and Digital Services will facilitate its transformation from a mobile centric operator into an integrated communications service provider with a leaner and flatter organisation, we believe. These efforts will hopefully translate into better operational performance and revenue growth going forward. Any cost savings will be a bonus to margins.  

- On lookout for CEO and CFO. With no CEO and the company going through an internal reorganisation, we doubt there will be any changes to Maxis’ strategic plans. While Maxis remains on the hunt for a new CEO, we gather that Maxis may also be on a lookout for a CFO to take over from Nasution, who is currently performing double duty as both CFO and joint COO (with Suren J Amarasekera).  

- Astro partnership. Nasution indicated Maxis is currently focused on signing up those who have registered interest (about 10k) in the Maxis fibre with Astro IPTV service. We think Maxis is still on a learning curve and Nasution indicated more clarity will be given in 3Q. 

- Investent case. Maintain NEUTRAL on Maxis with unchanged DCF-derived fair value of MYR7.15 (WACC=7.5%, TG=1.5%). We expect 
earnings growth to remain tepid as margins may still be at risk if device subsidies escalate or cost discipline is not maintained. But dividend yields of 5.9% look attractive based on FY13 DPS forecast of 40 sen.

Source: RHB