Maxis’ 1QFY19 results likely to be weak due to impact from U Mobile

KUCHING: Maxis Bhd’s (Maxis) upcoming first quarter of the financial year 2019 ( 1QFY19) results will likely be weak due to the lingering impact from U Mobile revenue loss, analysts say.

“We have lowered FY19F net profit by 11 per cent from the upcoming full-year revenue loss of RM90 million per quarter from the cessation of U Mobile’s leasing arrangement with Maxis’ 3G radio access network (RAN) on December 27, 2018,” said the research team at AmInvestment Bank Bhd (AmInvestment).

However, it raised its FY19F to FY21F dividend per share (DPS) by 16 to 30 per cent to a year-onyear (y-o-y) flattish 20 sen, as Maxis has affirmed that its FY19F operating cash flow is expected to be stable this year on expectations that Maxis’ programme to reduce working capital is expected to offset its lower earnings impact.

“This means that the group’s FY19F to FY20F dividend payout ratio is likely to rise slightly above 100 per cent compared with 88 per cent in FY18,” it added.

“With a flattish base capex of RM1 billion annually, Maxis’ plan to invest an additional RM1 billion over three years in fiberised solutions, digitalisation and productivity capabilities could be back-loaded towards the later years,” AmInvestment noted.

These capex programmes exclude increased spending for the 700MHz spectrum, which could cost up to RM431 million for two blocks of 2 x 5MHz bands, it added.

“However, management is confident of securing external financing even with FY19F net debt/EBITDA reaching 2.1-folds,” the research team said.

Aside from that, it said, Maxis is moving from a consumer/mobilecentric telco to a converged communications and digital solutions provider, similar to TM’s quadplay agenda over the past five years.

“As the telco that has been offering mobile and fibre connectivity over the past years, Maxis hopes to penetrate the enterprise business segment with an eye on managed/cloud services and IoT solutions,” it added.