MAXIS: Telecommunications Firm Posts Strong Earnings Driven by Cost Efficiencies

A leading telecommunications firm recently reported robust third-quarter (3Q25) core earnings, significantly surpassing both internal forecasts and market consensus. This impressive financial performance was primarily attributed to effective cost management and widespread operational efficiencies across the company.

Performance Review

The company recorded 3Q25 core earnings of MYR412 million, reflecting a 4% sequential increase and a 13% year-on-year rise. This strong quarter brought its nine-month (9MFY25) core earnings to MYR1.18 billion, marking a substantial 10% year-on-year growth. This performance exceeded RHB Investment Bank’s forecast by 82% and consensus estimates by 79%, indicating a notable beat on expectations.

The outperformance was largely driven by improved operational expenditure (opex) efficiencies and lower depreciation. Management has since upgraded its full-year EBITDA guidance to “mid-single-digit growth” from its earlier “flat to low-single-digit growth” forecast. Key cost rationalisation efforts included a significant reduction in staff costs (-8% QoQ, -5.4% YoY), alongside ongoing digitalisation initiatives and network optimisation programs.

Operational Developments & Challenges

The enterprise segment demonstrated significant traction, bolstered by improved wholesale contributions, which helped overall service revenue grow by 2% quarter-on-quarter and 1.3% year-on-year. This was further supported by a 3% QoQ and 5.6% YoY growth in fixed and solutions enterprise revenue. Consumer mobile revenue also saw a quarterly rise, backed by higher subscriber numbers and resilient Average Revenue Per User (ARPUs). Strategic capital expenditure, primarily allocated for two new high-capacity terrestrial fibre routes to support enterprise wholesale and access services, indicates focused infrastructure investment.

However, despite the commendable operational showing and a recent spectrum win, the stock’s re-rating suggests that these positives may already be largely reflected in its current valuation. The report highlighted persistent tight mobile competition and evolving 5G developments as ongoing market dynamics. While specific metrics like home connections showed tapering off in recent quarters, the core operational performance remains robust.

Outlook and Analyst’s View

The telecommunications provider is poised for continued year-on-year EBITDA growth into the fourth quarter of 2025. Positive developments in the 5G landscape, including the allocation of 3.5GHz spectrum to Digital Nasional Berhad (DNB) and an additional 20MHz (paired) of 2100 MHz for the company, are anticipated to yield long-term capital expenditure savings. The firm has also affirmed its commitment to taking up the Ministry of Finance’s (MOF) stake in DNB.

Given these factors, RHB Investment Bank maintained its “Neutral” rating on the stock. The investment bank revised its DCF-based target price upwards to MYR4.25 from MYR3.72, representing an 8% upside and an approximate 4% FY25F yield, with a 2% ESG premium factored in. This “Neutral” stance reflects the view that the strong operational performance and future prospects are largely “priced in” by the market.