Subscriber growth boosts Maxis second quarter earnings


  • Business
  • Thursday, 28 Aug 2003

By B.K. SIDHU

AMID intense competition in the local cellular market, Maxis Communications Bhd saw steady growth in new subscribers, which helped boost company earnings in the second quarter ended June 30.  

Maxis turned in a group net profit of RM229mil compared with RM192mil in the corresponding quarter last year, and revenue of RM1.01bil, up from RM919mil previously.  

For the first six months of 2003, revenue rose 21% to RM2.15bil, from RM1.7bil in the corresponding period last year, and net profit was up 5% to RM518mil, from RM494mil before. Earnings per share in the first half was 21.1 sen.  

Maxis chief executive officer Datuk Jamaludin Ibrahim said the company was happy with its financial results; these were within expectations, despite operating in an environment where competition was stiff.  

The results took into account the contribution from TimeCel, now known as Malaysian Mobile Services Sdn Bhd. The contribution, though small at RM37.5mil, was still within expectations. Maxis bought TimeCel last year for RM1.47bil.  

Jamaludin said, for Maxis, the underlying fundamentals remained strong, and on a standalone basis (without TimeCel) it recorded a 19% increase in revenue.  

Maxis saw 202,000 new additions to its base of 3.25 million subscribers as at end-March, bringing its total to 3.4 million. And with the inclusion of 419,000 TimeCel subscribers, Maxis' subscriber base swelled to 3.88 million as at end-June.  

However, this was lower than what Telekom Malaysia Bhd subsidiary Celcom (M) Bhd announced on Tuesday. Celcom said, with the inclusion of TMTouch's subscriber base, it had 4.055 million subscribers as at end-June. Celcom is merging with TMTouch.  

This clearly shows that Celcom has retaken the lead position in terms of subscriber numbers, something it once controlled for several years. DiGi Telecommunications Sdn Bhd was in third place with 1.9 million subscribers as at end-June. Industry-wide there were 9.83 million cellular subscribers as at end-June.  

Maxis also saw steady growth in postpaid average revenue per user (arpu) to RM167, against RM162 previously. Prepaid arpu, however, fell to RM64 from RM67 previously. In comparision, Celcom's arpu is RM100 for postpaid and RM55 for prepaid.  

Maxis' mobile data revenue rose 135% to RM226mil for the first half from RM96mil in the year-ago period, primarily due to a 99% increase in the volume of billable SMS messages from 569 million to 1.13 billion.  

On the integration of TimeCel, Jamaludin said it was progressing well, and TimeCel's direct and indirect expenses had been reduced by 30% to a run rate of RM23mil per month in June, from RM33mil in April.  

“We are confident that the rest of the integration plan will proceed as planned, both in terms of timeframe and cost,’’ Jamaludin said.  

The goodwill for the TimeCel purchase totalling RM1.282bil would be amortised over 10 years at RM128mil every year.  

The reasons why Maxis bought TimeCel are obvious. It was spectrum that Maxis was after. Combined with TimeCel's, Maxis has 35 Mhz of bandwidth, which is useful with the mobile data business growing.  

Bandwidth has become is a rare commodity in Malaysia.  

The savings from the TimeCel purchase in terms of capital expenditure is only RM271mil over the three years to 2005, and that reduces Maxis' original capex forecast of RM3bil to RM2.72bil.  

But there are other savings, one of which is the additional capacity that came with the purchase of TimeCel.  

Building this capacity could cost the company RM700mil upwards.  

The group's cash reserves fell to RM543mil, from RM2.09bil as at end-March, following the payment for the TimeCel purchase. 

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