Solid Q4 sees Maxis closing 2019 with strong momentum

• Strong performance in postpaid, revenue grew 4.2% against Q4 2018
• Fibre connections grew 25k in Q4 2019 to be at 369k connections in total

Maxis Bhd (Maxis) delivered solid operational performance in the fourth quarter ended 31 Dec 2019, driven by strong postpaid growth, high and stable mobile ARPU as well as consistent growth in fibre subscriptions in both Consumer and Enterprise. Pre-paid revenue at RM783 million against RM845 million in 2018 saw a drop of 7.3%.

The company reported strong EBITDA, industry-leading EBITDA margin and healthy Profit After Tax (PAT).  Backed by strong operating free cash flow, Maxis declared a fourth interim dividend of 5 sen net per share to bring the annual dividend to 20 sen.

“We are happy to close 2019 on a high note. We delivered a strong Q4, with continued leadership in our core mobile business whilst making strong progress towards our convergence ambition,” said Gökhan Ogut, CEO, Maxis.

He highlighted that, in line with the Government’s National Fiberisation and Connectivity Plan ambitions, Maxis has been aggressively expanding its fixed services footprint and building a strong home fibre customer base.

“Our keen focus on delivering unmatched personalised experiences has resulted in high customer satisfaction levels for the year (it had a Net Promoter Score of +56 points for the year). Always at the forefront of technology, we are accelerating 5G and ready to deploy as soon as spectrum is made available. We look forward to working with our commercial partners, the Ministry and MCMC to make this happen.”

Its 4G network continued to deliver more than 3Mbps 95% of the time in a demanding environment of increasing data usage. Capex for the year at RM1.2 billion was 16.9% higher than in 2018.

Financially, Maxis delivered ahead of its EBITDA and Operating Free Cash Flow guidance, demonstrating a resilient core business while executing its new strategic growth plan with the ambition to be Malaysia’s leading converged solutions company.

Q4 financial highlights year-on-year (yoy) – Q4 2019 vs Q4 2018

• Service revenue excluding wholesale rose 2.5% to RM1.978 billion from RM1.930 billion, backed by a resilient core performance

• Continued leadership in postpaid, with a monthly ARPU of RM90 and increase in postpaid subscribers by 432,000, bringing the total base to 3.4 million. The Hotlink Postpaid Flex and MaxisONE Share offerings continued to attract entry level postpaid as well as prepaid subscribers. With a larger base, strong customer engagement and high data usage, postpaid revenue excluding wholesale grew 4.2% to RM974 million from RM935 million

• Prepaid revenue at RM783 million against RM845 million in 2018 saw a drop of 7.3% due to continued SIM consolidation, successful migration from prepaid to postpaid, and reduced Mobile Termination Rate (MTR). Prepaid saw a monthly ARPU of RM42
• Demand for data continued to grow exponentially. Customers consumed an average of 15GB of data per month on a blended basis for Q4 2019, which is 37.3% higher than Q4 2018

• Consistent growth in fibre, adding 25,000 net new fibre connections in the quarter, bringing the total to 369,000. Home and business fibre continued to grow with take-up of MaxisONE Prime converged plan. The positive momentum in fibre take up was primarily driven by MaxisONE Prime bundle of mobile, home fibre and device, as well as the fast fibre packages of 300, 500 & 800 Mbps
• Strong normalised EBITDA, up 17.7% to RM904 million from RM768 million whilst normalised PAT rose 32.8% to RM344 million from RM259 million. The yoy comparison reflects the impact from termination of wholesale agreement, mobilisation of Enterprise business, building of fibre capability and capacity in Q4 last year. Underlying EBITDA and PAT is strong with a resilient core mobile business and encouraging growth in fibre and Enterprise as well as Fuel4Growth productivity programme delivering savings.
• Normalised EBITDA margin on service revenue remained high at 45.4% against 37.5% in Q4 2018
• Strong operating free cash flow at RM727 million for the quarter mainly due to positive results from Fuel4Growth and working capital programmes which improved capital efficiency and savings. The results brought the total operating free cash flow to RM3.4 billion for the year, 1.4% higher than 2018 despite the overall decline in EBITDA due to the termination of the wholesale agreement
• Declared a fourth interim dividend of 5 sen net per share. This brings the total dividend for the year to 20 sen per share
   

Key highlights for 2019

Accelerating convergence and building Enterprise capabilities for growth:

• Launched Malaysia’s first commercial NB-IoT service in key IoT market centres and partnered with MDEC as well as Sarawak Multimedia Authority to promote the development of the local IoT ecosystem
• Strategic partnership with Gamuda Land to create Malaysia’s first Maxis-delivered 5G township for Gamuda Cove, Gamuda Land’s township development
• Partnership with AmBank to create a roadmap of digital solutions for SMEs that will enable easy access to solutions for their financial and technology needs
• Strategic partnership with Cisco to jointly deliver a wide range of market leading technologies for enterprises to grow as their needs evolve in a digital, cloud and data driven world
• Partnership with Amazon Web Services (AWS) to build the largest pool of AWS-trained employees in Malaysia to deliver cloud solutions to businesses
• Maxis’ inaugural  Business SPARK Summit attracted over 650 delegates from Corporate, Government and large SME sectors who benefitted from a look on the exponential advancement of technology through engaging panel sessions, networking opportunities and Smart Solutions showcase

Delivering the best value, digitalised and unmatched personalised experiences

• Launch of Maxis’ brand new concept store at The Gardens, Mid Valley, setting benchmarks in retail and helping Malaysian retailers digitalise both their online and offline experience through digitally-driven physical retail solutions
• Strategic marketing partnership with Astro to offer bundled broadband with content
• Collaboration with Team Secret, a world-renowned professional eSports pro-gaming team to offer the best gaming smartphone bundles with Maxis Zerolution
• Launched Maxis TV, a video entertainment service that offers premium video content from movies to TV shows that is affordable and flexible for everyone. The all-in-one platform is easily accessible through the MyMaxis, Hotlink RED and Flex apps, enabling customers to choose to watch whatever, however and whenever they want
• Enabling the best device ecosystem with the easiest ownership for a truly connected lifestyle by introducing Maxis Postpaid Tablet and Maxis Postpaid Watch for Apple Watch Series 5 and the new seventh-generation iPad 

Maintaining 4G network leadership

• Announced at the beginning of the year, a base capex guidance at RM1 billion for the year with additional growth capex at RM1 billion for the next three years.
• Continued investment to maintain 4G network leadership and future-proof the network, including improving the redundancy and resilience of the fibre network for better for 4G LTE capacity and getting the core network 5G ready, supported by network virtualization and fibre connectivity to the base stations. Capex for the current quarter was RM577 million, bringing total amount invested to RM1.2 billion for the year, 16.9% higher than 2018

Expanding fibre footprint to serve even more homes and businesses

• In addition to TM and Sacofa partnerships in 2018, Maxis inked a partnership agreement with CT Sabah for access to HSBB Network Services which enable the roll out of Maxis’ affordable broadband plans to more Sabah homes and businesses
• Partnership with Allo for full access to HSBB Network Services to expand Maxis’  affordable fibre broadband offerings to customers in Cyberjaya, Bangsar South and Jasin

Accelerating 5G

Maxis continues to support the nation’s 5G agenda, running 5G use cases with Malaysian companies in a number of verticals. With its solid partnership with Huawei, Maxis was the first to conduct full-fledged 5G live trials in the country in March, and then forging ahead with them for the provisioning of 5G network in Malaysia in October 2019, ahead of the spectrum allocation.

A recent initiative was a collaboration with Celcom to explore Malaysia’s first active 5G Radio Access Network sharing to leverage each other’s resources, enabling wider and more efficient deployment of 5G network to accelerate access for consumers and businesses. The end goal is about delivering more value to customers and ensuring the robustness of the country’s network infrastructure.