MAXIS: Telecommunications Sector Sees Renewed Optimism Amid Stable Performance and Strategic Efficiencies
| Key Investment Data | |
|---|---|
| Investment Bank | TA SECURITIES |
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation | |
A recent investment bank report highlights a positive outlook for a leading telecommunications provider, citing stable financial performance, strategic cost efficiencies, and a resilient future outlook. Despite facing challenges such as intense competition and softer utilization rates, the company’s strong fundamentals and growth drivers have led TA Securities to issue a BUY recommendation with a revised target price of RM0.25, representing a significant upside of 25.0% from its last traded price of RM0.20.
Performance Review
The company is projected to achieve a relatively steady core net profit quarter-on-quarter. This stability is underpinned by consistent mobile subscriber growth across all segments, particularly in postpaid users, along with improved prepaid churn. The strategic acceptance of a 2×10 MHz spectrum in the 2100 MHz band is set to significantly enhance network capacity and improve capital expenditure efficiency by potentially deferring costly network densification and equipment upgrades.
However, the sector continues to grapple with a highly competitive pricing environment, which has resulted in subdued Average Revenue Per User (ARPU) across segments. Blended ARPU remains at a historical low, pressured by the prevalence of entry-level postpaid plans. Additionally, the company has experienced slower growth in fibre subscriber net additions compared to key competitors.
Future Outlook and Growth Drivers
Looking ahead, management has guided for low single-digit service revenue and EBITDA growth in the upcoming year, with capital expenditure maintained at approximately RM1bn. Analyst forecasts project revenue growth of 2-4% and core net profit growth of 5-9% over the 2025-2027 estimated period. This anticipated earnings growth is primarily driven by ongoing operational efficiencies and strategic cost optimization initiatives.
The company’s commitment to shareholder returns remains strong, with an expected sustainable annual dividend payout of 17 sen, translating to an attractive dividend yield of 4.4%. While postpaid ARPU may remain under pressure due to continued migration to entry-level plans, fibre ARPU is expected to stay resilient, supported by competitive and value-driven bundled offerings. Nevertheless, overall subscriber growth is likely to be moderate given the competitive market landscape and structural advantages held by some competitors.
Despite some near-term uncertainties surrounding the 5G deployment timeline and the complexities of multi-party coordination in Malaysia, the report suggests these factors are sufficiently accounted for in the valuation. The company’s established brand reputation and high customer loyalty are seen as key strengths supporting the positive investment rating.
