Maxis Berhad reported its Second Quarter (2Q20) financial results last Thursday. By market definition, the Telco now has 11.73 million mobile subscribers compared to 11.32 million of March 2020 (1Q20). It added 414k subscriptions during April, May and June 2020.
The Telco’s prepaid subscriber base have grown to 7.83 million subscriptions. Maxis added 442k new prepaid mobile subscriptions during the second quarter period. It said it added “significant subscriber base” in June 2020, “from new products and sales targeting underserved areas,”. In early June 2020, the Telco announced new Unlimited Internet Hotlink Prepaid plans with limited data quota. It had 7.39 million prepaid subscriptions as of March 2020.
Maxis saw it postpaid subscriber base shrink to 3.8 million subscriptions where it lost 32k postpaid users in 2Q20. It had 3.83 million postpaid subscription as of March 2020.
Despite the drop in postpaid subscriber base, Maxis said it “continued strong prepaid-to-postpaid migration as customers step up for higher value tiers especially Hotlink Postpaid.”
For ARPU, prepaid users spent an average RM31/month (-RM1) while Postpaid users spent RM79 (-RM2).
Maxis increased its mobile Internet users to 8.4 million compared to 8.3 million in the previous quarter.
There are 103k wireless broadband subscribers.
When it comes to revenue generating subscriptions (RGS), Maxis has 9.76 million mobile subscriptions (+78K) including 5.98 million on prepaid (added more prepaid subscriptions for the 1st time since the third quarter of 2015), 3.69 million on postpaid (including M2M) and 98k on wireless broadband. For RGS, the numbers are even lower as Maxis added 92k new prepaid RGS subscriptions but lost 18k subscribers on postpaid.
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 now has 411k Maxis fibre broadband customers with an addition of 19k new subscriptions in 2Q20 and a lower ARPU of RM106/month (-RM3).
Q2 Financial Highlights year-on-year (yoy) – Q2 2020 vs Q2 2019, according to Maxis:
- Resilient underlying service revenue (excluding wholesale) at RM1,887 million, the same level as recorded in Q2 2019, driven by strong growth in postpaid and the fibre business.
- Strong postpaid results, leading the market with revenue (excluding wholesale) growing 2.1% to RM961 million from RM941 million in Q2 2019. The quarter saw continued strong prepaid-to-postpaid migration as customers step up for higher value tiers especially Hotlink Postpaid. Subscriptions grew 9.7% yoy bringing the total to 3.4 million. Postpaid APRU decreased to RM85 from RM91, reflecting reduction in the Mobile Termination Rate (MTR), reduced international outbound roaming, the dilution effect from Hotlink Postpaid and Maxis Postpaid Share Line.
- Prepaid segment remained very competitive. The MCO has put a constraint on physical retail channels and field sales team in April and May. Prepaid revenue was 13.3% lower at RM686 million against RM791 million recorded in Q2 2019. Nevertheless, with effective execution of digital channels for top-ups, massive subscriber adds in June from new products and sales targeting underserved areas, prepaid ARPU was stable at RM40 per month when compared to RM41 in Q2 2019 owing to strong Hotlink App adoption and digital channels for top-ups.
- Demand for data grew exponentially. Our customers consumed an average of 21.1 GB of data per month on a blended basis during the quarter, 54.0% higher than Q2 2019.
- Increased demand for digital services. Our Maxis and Hotlink apps are important channels for customer convenience, access to rewards and ease of transactions, including top-ups, payments and digital services. Adoption of these apps continue to grow, with 73% of our prepaid mobile Internet (MI) customers now using the Hotlink App, significantly up from 59% in Q2 2019, while 58% of our postpaid primary account holders are on the Maxis App, compared to 43% in the same period last year.
- Continued positive momentum in fibre, with 32.6% growth in fibre connections yoy, bringing the total to 411k. The take up was primarily driven by strong adoption of Maxis Unlimited Postpaid & Fibre converged packages, resulting in steady ARPU from superfast fibre packages of 300, 500 and 800 Mbps. The installation backlogs due to MCO were cleared in June.
- Normalised EBITDA remained healthy at RM903 million, 4.6% lower than RM947 million registered in Q2 2019. Consequently, Normalised PAT for the year was 13.6% lower at RM338 million against RM391 million in Q2 2019. The decline was mainly due to loss of wholesale business and higher impairment made to receivables based on higher credit risk in view of the COVID-19 pandemic and its impact on economies worldwide.
- Normalised EBITDA margin on service revenue remained high at 47.5% against 49.4% in Q2 2019.
Operating free cash flow sustained at a high level at RM936 million, 8.3% lower than Q2 last year, but strengthened 31.3% from Q1 2020. Productivity programme delivering results, improving capital efficiency and big-data analytics improved collections process.
- Declared a second interim dividend of 4 sen net per share for the quarter. The lower distribution at this unprecedented time will allow Maxis to continue supporting consumers, businesses and communities, and at the same time being prudent in preserving cash and ensuring protection of the core business in preparation for the opportunities from recovery of the economy.
In a media statement posted to Bursa Malaysia, Maxis CEO, Gökhan Ogut said, “Overall, we delivered a strong Q2 performance amidst a challenging environment. We continued to lead the mobile market and turn in consistent growth in our converged solutions for individuals, homes and businesses. We are confident of playing a key role as a catalyst for digitalisation for consumers and businesses, which is in line with our recent brand refresh built around our new brand purpose, ‘Always be ahead’. We are committed to support our customers to be more digital and adapt quickly to a rapidly changing environment. With the capabilities to be a strong partner to Enterprises and SMEs, we continue to empower them to adapt to the accelerating changes in the business landscape by delivering new technologies, models and mindsets through our converged offerings. Meanwhile, the health and safety of all our employees remains our priority, and we are proud of those in the field who continue to deliver essential services to our customers.
We will continue to invest in our network to provide the best fixed and mobile connectivity to our customers. At the same time, we are accelerating our 5G network readiness, engaging with the industry on trials, RAN sharing and will feature even more use cases in the coming months. We are ready to deploy 5G and are committed to providing the best 5G innovation to Malaysia as soon as the spectrum is made available. Moving forward, we continue to drive our strategy execution and build more momentum in achieving our converged solutions ambition. We will also continue to ensure that consumers and businesses have uninterrupted connectivity and be ready for recovery,” he said.