MAXIS: Strong Earnings Driven by Cost Efficiencies, Analyst Rating Adjusted

PublicInvest Research reported that Maxis Bhd (Maxis) achieved a significant 12.6% year-on-year increase in its third quarter of financial year 2025 (3QFY25) net profit, reaching RM412 million. This strong performance was primarily fueled by stringent cost management. The cumulative nine-month FY25 results surpassed PublicInvest’s own expectations, representing 81% of its full-year forecast, though it remained within the broader market consensus of 79%.

Performance Review

The improved profitability was largely attributed to a notable reduction in operating expenses. Direct costs decreased by 2.3% year-on-year, while staff and operations & maintenance costs saw declines of 5.4% and 7.8% respectively. These cost efficiencies led to an enhancement in the company’s EBITDA margin, which rose from 40.7% in 3QFY24 to 42.6% in the current quarter.

Despite the strong profit growth, 3QFY25 revenue saw only a marginal increase. This was due to a rise in service revenue, driven by growth in postpaid and enterprise segments, being partially offset by lower device sales. The report also highlighted softer average revenue per user (ARPU) trends, with postpaid ARPU declining by 6% year-on-year and prepaid ARPU by 5% year-on-year, even as the postpaid customer base expanded by 10.5%. Enterprise revenue growth was mainly propelled by network solutions, cloud solutions, and wholesale business.

Future Outlook

PublicInvest maintains a positive outlook on the company’s future, largely due to its recent acquisition of a 4G spectrum assignment offer from the Malaysian Communications and Multimedia Commission (MCMC). The RM400 million deal secures a 2x10MHz block of the 2100MHz spectrum, complementing existing allocations. This additional spectrum is anticipated to significantly enhance the company’s 4G network capacity and alleviate congestion in densely populated urban areas, with the pricing considered fair and reasonable over its 12-year tenure.

Analyst Recommendation

In light of the revised cost assumptions and strong earnings, PublicInvest Research has adjusted its FY25-26F earnings forecasts upwards by 3%. Consequently, the target price (TP) for Maxis Bhd has been revised from RM3.90 to RM4.00. However, the research firm has downgraded its rating from “Trading Buy” to “Neutral,” citing limited upside potential from the current market price of RM3.95. The company also declared a third interim dividend of 4.0 sen per share, consistent with the previous year.