Maxis sees EPS boost from TimeCel purchase

BY P.W. THONG

MAXIS Communications Bhd, which formally completed its RM1.47bil acquisition of TimeCel Sdn Bhd on Wednesday, expects the latter to enhance its group earnings per share (EPS) by between 10 and 15 sen annually from next year. 

This would translate into additional net profit of RM245mil to RM368mil a year, based on its current outstanding share capital of 2.45 billion shares, Maxis chief executive officer Datuk Jamaludin Ibrahim told reporters in Kuala Lumpur yesterday. 

Jamaludin Ibrahim

He also said Maxis was “more or less confident” of maintaining its current EBITA (earnings before interest, tax and amortisation) operating margin of about 50% in the next two to three years. 

Jamaludin said the impact of the acquisition on the current financial year to Dec 31was expected to be “neutral”, because the higher contributions from TimeCel would be partially offset by additional investment and operational costs. 

In particular, Maxis would incur this year a one-off operation expenditure (opex) of RM120mil on top of the RM250mil capital expenditure (capex) it was prepared to make following the acquisition. 

The bulk of the RM120mil would be used to re-deploy existing TimeCel base stations, Jamaludin said. About a third of TimeCel's 900 base stations would be retained and the balance re-deployed. 

On network integration, Jamaludin said the process was expected to take 12 to 15 months. Upon completion, both Maxis and TimeCel subscribers would enjoy enhanced network quality and coverage, he added. 

TimeCel subscribers would be able to experience Maxis's customer service and network quality by the end of the third quarter, and integrated network by mid-2004. 

Jamaludin also said the TimeCel name would be phased out by year's end, but Maxis would honour all existing TimeCel obligations beyond 2003. 

He assured Maxis and TimeCel subscribers that there would be “minimal” disruption during the integration process. “We operate on the principle of making the integration process as seamless as possible, and TimeCel subscribers can retain their 017 numbers and SIM cards – unless they choose to switch to Maxis's rate plans,” he said. 

Jamaludin also said TimeCel could expect its operating expenditure to be cut by up to 50% next year. 

Going forward, he said Maxis had identified several growth areas to strengthen its position as market leader. In particular, the group expects its mobile data segment to experience a growth rate higher than the industry's in the future due to increased demand for short messaging service (SMS) and other on-demand applications, such as news updates and games. 

Other growth areas include the youth segment, as well expansion into new geographical areas such as east Malaysia. 

The market for mobile data is estimated to be worth more than RM500mil last year and growing at between 30% and 40% annually. 

The contribution of mobile data to Maxis's revenue had increased from RM70mil in 2001 to RM245mil last year, Jamaludin said, adding that he expected the sector to grow by at least 50% this year to RM367mil. Revenue from mobile data is expected to account for over 10% of the group's total this year. 

Jamaludin said Maxis expected its subscriber base to grow in line with, if not faster than, the industry. The industry grew at about 40% last year. It is expected to grow at the high teens or low twenties this year, and at low teens the next two years, he added. 

For its fiscal 2002, Maxis posted pre-tax profit of RM1.28bil and turnover of RM3.77bil, up from RM777.6mil and RM3bil respectively in 2001.  

Related Story:Telcos can expect more changes