Home Services continues to drag down Maxis' bottomline

  • Home Services segment losses widen, despite revenue more than doubling
  • Mobile Services register slight decline in both sales and earnings

Home Services continues to drag down Maxis' bottomlineMAXIS Bhd, the country’s largest mobile operator, is continuing to see its Home Services business dragging down overall group earnings.

The company, which released its full year 2013 financial results today (Feb 11), revealed that revenue for its Home Services business has more than doubled last year to RM71 million, compared with RM31 million in 2012.

However, the segment registered a loss from operations of RM307 million in 2013, versus an operational loss of RM187 million in 2012. [RM1 = US$0.30]

“Home Services revenue increased by RM40 million as a result of higher home fibre Internet subscriptions. The EBITDA (earnings before interest, tax, depreciation and amortisation) loss was primarily due to provision for contract obligations made in respect of Home Services’ network and content costs,” Maxis said in its filing to Bursa Malaysia.

Maxis’ Home Services involve offering customers fixed-line broadband services as well as Internet Protocol TV (IPTV) services. This is possible after it signed a deal with Telekom Malaysia Bhd, which allows it to offer services via TM’s high-speed broadband (HSBB) infrastructure. As for IPTV content, it has a partnership with sister company Astro Malaysia Holdings Bhd.

For the full year ended Dec 31, 2013, Maxis posted a 4.9% decline in its net profit at RM1.77 billion while revenue gained marginally at RM9.1 billion.

It explained in the Bursa filing that lower earnings were partly driven by the career transition scheme (CTS) costs of RM143 million and provision for contract obligations related to its Home Services of RM65 million.

“Excluding the CTS costs, accelerated depreciation related to our network modernization programme, write-down of assets and provision for contract obligations, the group net profit would have been increased by 2% to RM2.09 billion,” said the company.

“On a year-on-year basis, group revenue grew by 1% or RM117 million, contributed by all business segments except Mobile Services,” it said.

Mobile Services revenue declined marginally (-1%) to RM8.49 billion while EBITDA fell slightly (-1%) to RM4.27 billion. The slightly lower revenue was mainly driven by the reduction in mobile subscriptions – it registered a decline of 1.19 million subscribers to 12.89 million. (It had 14.1 million subscribers as at end-2012). 

The marginally lower earnings was mainly driven by the one-off CTS costs.

Home Services continues to drag down Maxis' bottomline“Blended ARPU (average revenue per user) declined by RM1 to RM47 (versus RM48 in 2012) as a result of the reduction in voice and SMS usage not fully compensated by the increase in data usage,” said the company.
Maxis chief executive officer Morten Lundal (pic) admitted that 2013 “was not the easiest year for Maxis” and highlighted that 2014 will be a "transformational year" for the company.

“Looking ahead, it is clear where we need to go and what we need to do. Most importantly, we want to make sure Maxis delivers the best Internet experience," he said in a statement.

“So, we will invest in network and IT, and design products and more services that maximise our customers’ freedom to communicate. There will be many challenges and much excitement, and we are well positioned to take advantage of the many opportunities to deliver shareholders’ value for the longer term,” he added.

The good news is that the company’s Enterprise Fixed segment, which is identified as a future growth driver, posted a 18.2% revenue growth to RM240 million. The segment also registered a 41% jump in EBITDA to RM90 million.

Its International gateway services saw a 43% gain in revenue to RM281 million and a 2% gain in EBITDA to RM49 million.

Related Stories:
Maxis YTD revenue up 3%
Maxis in pact with 14 content providers for new IPTV service
Astro and Maxis sign strategic partnership
Maxis revamps organisational structure
For more technology news and the latest updates, follow us 
on TwitterLinkedIn or Like us on Facebook.

Keyword(s) :
Author Name :
Download Digerati50 2020-2021 PDF

Digerati50 2020-2021

Get and download a digital copy of Digerati50 2020-2021