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About 1.23 million Maxis Mobile Subscriptions are not Profitable as of 3Q19

Maxis Berhad reported its Third Quarter (3Q19) financial results last Friday. The Telecommunication provider now has some 1.23 million (+95k) mobile subscription that is non-revenue generating (not profitable) for the company. It had 1.13 million non-revenue generating subscriptions in 2Q19.

The Telco reported 11.15 million mobile subscribers (including M2M– Machine to Machine subscription) in 3Q19 compared to 11.02 million as of 2Q19. Out of these, about 9.93 million are revenue generating mobile subscriptions in 3Q19.

maxis-3q19-mobile-subscribers-fibre

Data from Maxis financials reveal that the company added 137k new mobile subscribers in 3Q19 however only 42k are revenue generating subscribers (RGS). There are 90k new mobile subscriptions (mostly prepaid) in 3Q19 (July-September) that are not generating any profit or revenue for Maxis.

Maxis revenue generating subscribers (RGS) are defined as active line subscriptions (postpaid and prepaid) that excludes those without revenue generating activities for more than 30 days.

There are 7.46 million Hotlink prepaid subscribers with an ARPU of RM35 (unchanged since 1Q19). Maxis claims to have added 2k new prepaid subscriptions between July, August and September 2019. It lost 89k revenue generating prepaid subscribers in the 3-months.

Postpaid subscriber base stood at 3.58 million and 111k on wireless broadband with an overall APRU of RM85 (-RM1). The Telco added 143k new postpaid subscription but lost 4k wireless broadband subscribers in 3Q19.

There are 8.5 million mobile Internet users, up by 100k compared to the previous quarter. Postpaid users consumed an average 15.06GB and Prepaid at 15.21GB in the latest quarter. 88% of the postpaid base are smartphone users while its 84% for the prepaid base.

In terms of mobile app usage, the My Maxis App is used by 46% of the postpaid base (only primary/principle account users) and 61% of the prepaid Internet users.

Maxis has got 305k Home Fibre (+29K) and 39k Biz Fibre (+5k) connections.

The Telco claims 4G LTE speeds more than 5Mbps in key market centres or 87.1% of its 4G coverage. About 12.9% of its 4G LTE coverage have poor Internet speeds of below 5Mbps.

Key Financials:

maxis-3q19-key-financials

Financial highlights Quarter-on-Quarter (qoq) – Q3 2019 vs Q2 2019, according to Maxis:

  • Service revenue was up 1.1% to RM1,940 million from RM1,918 million, backed by a resilient core performance.
  • Continued leadership in postpaid, with a high monthly ARPU of RM90 and increase in postpaid subscribers by +128k, bringing the total base to 3.2 million. The Hotlink Postpaid Flex and MaxisONE Share offering continued to attract entry level postpaid as well prepaid subscribers. MyMaxis app adoption increased to 46%, with a monthly average data usage of 15.1 GB. With a larger base, strong customer engagement and high data usage, postpaid revenue including wholesale grew to RM979 million from RM972 million.
  • Stronger prepaid performance, with prepaid revenue increasing slightly to RM794 million from RM791 million. Monthly ARPU remained high at RM41, with continued strong Hotlink RED app adoption of 61% and data usage of 15.2 GB.
  • Solid growth in fibre, adding +34k net new fibre connections, bringing the total to 344k. Home and business fibre continued to grow with strong take-up of MaxisONE Prime converged plan. The positive momentum in fibre take up was a result of co-marketing initiatives with Astro, MaxisONE Prime bundle of mobile, home fibre and device, as well as the attractiveness of the superfast fibre packages (300, 500 & 800 Mbps).
  • Healthy normalised EBITDA, up 1.8% to RM964 million from RM947 million. Normalised EBITDA margin on service revenue remained high at 49.7% against 49.4% in the previous quarter.
  • Operating free cash flow remained strong, growing quarter after quarter and increasing by 4.4% in Q3 to RM1.1 billion. Despite normalised profit after tax trimming by 7.7% to RM361 million, impacted primarily from termination of the wholesale agreement, the strong operating free cash flow has enabled the Company to continue reinvesting for the future including mobilisation of Enterprise business growth opportunities and Fibrenation, and declare a third interim dividend of 5 sen net per share.

In a media statement posted to Bursa Malaysia, Gökhan Ogut, CEO, Maxis said, “It was a strong Q3 performance, with many positives across all our business segments. Our convergence ambition is on track. We are making very good progress in our enterprise growth strategy with solid partnerships, and continuing to build a strong home fibre base in line with the recently launched National Fiberisation and Connectivity Plan (NFCP). We are already forging ahead with our 5G readiness and committed to deploy as soon as spectrum is made available. We will continue to deepen our engagement with our customers – individuals, homes and businesses – and in providing them with the best digital experience and converged solutions.”

About Kugan

Kugan is the founder of MalaysianWireless. He has been observing the mobile industry since 2003. Connect with him on Twitter: @scamboy