KUALA LUMPUR (Nikkei Markets) -- Malaysian wireless carrier Maxis said Friday net profit fell 30.2% in the third quarter from a year earlier following loss of a hefty radio bandwidth leasing deal and higher spending.
Net profit for the three months ended Sep. 30 totaled 358 million ringgit ($85.48 million) compared with 513 million ringgit in the same quarter last year, Maxis said in an exchange filing. Quarterly revenue edged nearly 1% higher year-on-year to 2.29 billion ringgit from 2.26 billion ringgit.
Maxis' latest earnings lagged market expectations, sending its share price lower. Shares of Maxis closed 1.1% down at 5.44 ringgit apiece, while the benchmark FTSE Bursa Malaysia KLCI ended 0.1% lower.
Analysts flagged bleak outlook for the industry as competition intensifies and expenditure rises, even as Maxis managed to halt subscriber loss.
Maxis' lease of its 3G radio access network to U Mobile generated hundreds of millions of ringgit in revenue annually. "Maxis is likely to continue to experience flattish fourth quarter revenue as the wholesale arrangement has lapsed in June this year," said AmInvestment Bank's Analyst Alex Goh.
Malaysia's telecom companies are striving to recover from a government push to lower prices and cut-throat competition that has been a drag on their profitability for more than a year. The mobile telecom sector is dominated by three operators with DiGi.Com, Maxis, and Axiata Group's unit Celcom, each commanding about a third of the total subscribers in a country of 32 million people. The unlisted U Mobile jostles with other smaller players for the remaining market share.
Last week, rival Digi.com reported a 9.3% year-on-year drop in third quarter net profit, hurt by a spike in costs and declining revenue. The local unit of Norwegian telecom giant Telenor also warned of a wider decline in operating earnings this year.
Maxis' service revenue, which excludes sale of devices, hubbing revenue and network income, was 4.3% lower at 1.94 billion ringgit, while earnings before interest, tax, depreciation and amortization, or EBIDTA shrank nearly 8% to 934 million ringgit in the third quarter.
The company's revenue-generating subscriptions expanded slightly to 9.67 million subscribers, while average revenue per user remained unchanged at to 58 ringgit per month.
Maxis said it is keeping its full-year guidance unchanged. The company had previously projected its service revenue and EBITDA would decline by "low-single digit" and mid-single digit respectively. Operating free cash flow, excluding spectrum fees, would likely remain at a level similar to that of 2018.
For its first nine months, net profit slumped 23% to 1.16 billion ringgit from 1.51 billion ringgit. Revenue slipped 0.4% year-on-year to 6.72 billion ringgit from 6.75 billion ringgit. Year-to-date service revenue fell 4% to 5.81 billion ringgit, while EBITDA was down 7% to 2.83 billion ringgit.
Beyond 2019, the company is targeting to achieve over 10 billion ringgit in service revenue. The company also plans to spend around one billion ringgit over three years on its broadband and enterprise business.
"We are making very good progress in our enterprise growth strategy with solid partnerships, and continuing to build a strong home fibre base in line with the recently launched National Fiberisation and Connectivity Plan," said Maxis CEO Gokhan Ogut.