Maxis Berhad reported its Third Quarter (3Q20) financial results last Friday. The mobile and fixed Telecommunication company revealed that it now has 11.12 million mobile subscribers in Malaysia, a number that is now lower compared to the 11.73 million mobile subscriptions it had in 2Q20.
The Telco lost 618k mobile subscribers between July, August and September 2020. This also include -683k prepaid subscriptions it lost in the latest quarter despite adding 442k new prepaid subscriptions in 2Q20 (April, May, June 2020). Even with the smaller prepaid subscription base, Maxis says that its “Hotlink Prepaid Unlimited continues to have strong adaption.” It added 54k new postpaid subscriptions.
Maxis said it increased investment (Capex +16.5% year to date) “to protect our premium network and continue delivering the Unmatched Personalised Experience.” In the meantime, MalaysianWireless notes that there are a huge number of network related complaints from consumers, on the Maxis social media pages in the past month and the past decade.
The mobile operator also said it is “boosting capacity to support MCO Work from Home” and “maintaining top (network) performance” for 3Q20. However Maxis customers consumed less mobile Internet usage in 3Q20 at an average of 19.49GB vs 21.07GB in 2Q20.
Breakdown of Maxis mobile subscriptions by market definition below:
- 7.15 million Hotlink Prepaid subscribers, lost 683,000 subscriptions (vs 7.83 million in 2Q20)
- 3.86 million Postpaid subscribers (including ‘machines’), added 54,000 subscriptions (vs 3.8 million in 2Q20)
- 8.6 million mobile Internet users (vs 8.4 million in 2Q20)
- 424k fibre broadband subscribers, added 13,000 new subscriptions (vs 411k in 2Q20)
- Prepaid Arpu at RM33 (+RM2), Postpaid Arpu at RM78 (-RM1), Fibre Arpu at RM104 (-RM2)
When it comes to revenue generating subscriptions (RGS), Maxis has 9.77 million mobile subscriptions (+7K) including 5.9 million on prepaid (-67k), 3.75 million on postpaid (+62k including M2M) and 110k (+12k) on wireless broadband.
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.
As a “Premium Network” service provider, Maxis did not reveal its 4G LTE coverage statistic for 2020. In the 3Q19, 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.
Q3 financial highlights Year-on-Year – Q3 2020 vs Q3 2019 (according to Maxis):
- Stable underlying service revenue (excluding wholesale) at RM1,930 million, up 0.5% from Q3 2019, driven by growth in core mobile business and fibre segment.
- Continued to lead in postpaid as subscriber base increased by 6.8% to 3.5 million users, largely a result of strong prepaid-to-postpaid migration as customers step up for higher value tiers especially Hotlink Postpaid. Postpaid revenue was lower by 2.3% at RM956 million. Postpaid ARPU decreased from RM90 to RM84 per month, as a result of reduced Mobile Termination Rate (MTR), COVID-19 impact on international roaming and the dilution from increasing Hotlink Postpaid entry level subscribers.
- Prepaid remained competitive with a stable ARPU at RM40 per month, despite the MTR reduction since January 2020. The segment’s revenue declined by 9.7% to RM717 million, while subscription base was slightly down by 6.6% to 5.9 million. This was due to continued SIM consolidation and successful conversion of customers onto the Hotlink entry point postpaid service.
- Strong growth in fibre, with 23.3% increase in fibre connections yoy, bringing the total to 424k. As most of the subscriptions were of the lower tier, Maxis experienced a slight decrease in ARPU to RM104 per month from RM108 per month in Q3 2019.
- Normalised EBITDA remained healthy, with a slight decrease by 4.1% to RM924 million from RM964 million in Q3 2019. Meanwhile, Normalised EBITDA margin on service revenue was 47.6% against 49.7% in Q3 2019.
- Strong normalised profit after tax (PAT) of RM364 million, up 0.8% from Q3 2019 on the back of resilient EBITDA and lower operating expenses.
- Operating free cash flow was RM745 million for the quarter compared to RM1,066 million in Q3 the preceding year, mainly due to two Universal Service Provision (“USP”) payments made to MCMC to support connectivity for rural communities and underserved areas, as well as increased investments in network and working capital management improvements.
- Strengthened commitment to delivering the best technologies and network (mobile and fixed) with RM319 million in capex, an increase of 31.8% from Q3 2019. The investments focused on enhancing Maxis’ network performance and additional capacity to support data traffic growth.
- Increased adoption of digital services. With increasingly digital lifestyles, the Maxis and Hotlink apps continued to show strong adoption, as more and more customers opt for convenience, rewards, and ease of transactions. As at Q3 2020, 74% of our prepaid mobile Internet customers are now using the Hotlink App against 61% last year, while 57% of our postpaid primary account holders are on the Maxis App, compared to 46% in the same period last year.
- A dividend of 4 sen net per share was declared for the quarter. The prudent distribution during this challenging time will allow Maxis to continue their commitment to consumers, businesses, and communities and at the same time preserve cash and ensure protection of the core business.
In a media statement posted to Bursa Malaysia, Maxis CEO, Gökhan Ogut said, “We delivered another quarter of strong performance, driven by our agility in adapting to a rapidly changing and challenging environment. Keeping our employees, customers and the communities safe continue to be a priority while we focus on providing reliable connectivity and an unmatched personalised experience. For enterprises, we are committed to developing innovative solutions and being a key partner in helping them achieve their digital ambitions. We are doubling down on our convergence, fibre and Enterprise strategy to continue to create value for our stakeholders.”
