Maxis' dividend is lower than projected, says Maybank IB

KUALA LUMPUR: Maybank Investment Bank Bhd (Maybank IB) said that although Maxis Berhad's net profit was in line with its consensus expectation, the company's dividend was lower than expected.

Maxis' net profit for the first quarter of 2023 (1Q23) was RM320 million, up seven per cent year on year (y-o-y) and 33 per cent quarter on quarter (q-o-q).

The q-o-q downtick in earnings before interest, taxes, depreciation, and amortisation was offset by sharply lower taxes stemming from the absence of Cukai Makmur.

The telecommunication company declared a four sen dividend per share, following an unexpected deviation from the five sen run-rate, with management noting prudence in lieu of potential investments in the future quarters.

"We view risk-reward as being merely balanced presently, with Maxis' generally stable earnings delivery being offset by uncertainty over 5G and Maxis' dividend outlook," Maybank IB said in a note today.

According to Maybank IB, total service revenue fell by 0.1 per cent y-o-y in 1Q23, with mobile service revenue declining by 0.5 per cent y-o-y due to reduced prepaid customers and average revenue per user (ARPU).

Enterprise revenue was stable y-o-y due to increasing solution billings offsetting decreasing mobile contribution.

"Consumer fibre revenue continued to trend positively on further subscriber growth. Opex trended slightly lower q-o-q, culminating in Ebitda margin declining by 0.1ppt to 38.5 percent," it said. 

According to Maybank IB, Maxis management has highlighted incremental details on the dual 5G network architecture that have remained at a low level as negotiations are still in the early stages, with the management wanting to sign up for 5G access on DNB's network.

The investment bank maintained its 'Hold' rating on Maxis, with a RM4 target price.

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