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Nikkei Markets

Maxis second quarter net profit fell 16.4% on year

Keeps earnings guidance despite eroding subscriber base, intense competition

Maxis’ prepaid subscribers migrating to post-paid plan continue to opt for rival offerings.   © Reuters

KUALA LUMPUR (Nikkei Markets) -- Malaysian wireless carrier Maxis said Wednesday its net profit fell 16.4% in the second quarter from a year earlier as service revenue at its prepaid segment declined.

Net profit for the three months ended Jun. 30 totalled 478 million ringgit ($117.81 million) compared with 572 million ringgit in the same quarter last year, Maxis said in an exchange filing. Quarterly revenue slipped 3.8% year-on-year to 2.25 billion ringgit from 2.34 billion ringgit.

"We maintain our guidance for 2018 with service revenue and EBITDA to decline by mid-single digit and high single digit respectively," Maxis said. Base capital expenditure will likely come in around 1 billion ringgit, while free cash flow, excluding spectrum fees, is expected to remain flat, the company reiterated.

Prepaid service revenue declined 13% to 854 million ringgit in April-June as subscriber base shrank due to continued consolidation, migrations to post-paid plans and intense price competition. Overall, service revenue for the quarter was 2.01 billion ringgit, or 2.7% lower year-on-year.

Total revenue-generating subscriptions fell 5%, or about 557,000 accounts, to end the second quarter at 9.86 million subscribers.

Analysts cautioned risk of intensifying competition in the months ahead although Maxis' latest financial results came in largely within market expectations.

"Maxis still hasn't found a solid way to arrest the decline" in service revenue, said JF Apex Securities analyst Siau Li Shen. One reason is because Maxis' prepaid subscribers migrating to post-paid plan continue to opt for rival offerings, she added.

For its first six months, net profit declined 6.5% to 1 billion ringgit from 1.07 billion ringgit in the same period last year. Revenue meanwhile fell 4.9% to 4.48 billion ringgit against 4.71 billion ringgit in the same six-months last year.

Year-to-date, earnings before interest, tax, depreciation and amortization, or EBITDA, dropped 6% to 2.01 billion ringgit, while total service revenue was 4% lower at 3.99 billion ringgit.

Shares of Maxis rose 0.9% to 5.55 ringgit, while the benchmark FTSE Bursa Malaysia KLCI also ended 0.9% higher.

--Jason Ng

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