MAXIS: Telecommunications Firm Delivers Strong Earnings Amidst Operational Efficiencies

A prominent telecommunications company reported a robust financial performance, with its full-year 2025 net profit reaching RM1,561.0 million, marking an 11.8% year-on-year increase. This figure aligns closely with both internal and consensus estimates, achieving 100% and 101% of projections, respectively. The fourth quarter of fiscal year 2025 also saw a significant boost, with net profit surging 18.4% year-on-year to RM380 million, supported by a 3.8% year-on-year rise in revenue to RM2,876 million.

Drivers of Growth

The impressive year-on-year improvement in net profit was primarily driven by higher revenue generation and enhanced operational efficiency. Specifically, effective cost management played a crucial role in the fourth quarter’s strong showing. Declines in network costs, staff and resource costs, and operation & maintenance costs largely offset increases in traffic, commissions, and other direct expenses. The increase in 4QFY25 revenue was supported by growth across service revenue (postpaid, home, and enterprise fixed & solutions segments) and device revenue.

Strategic Initiatives and Future Prospects

Looking ahead to fiscal year 2026, the company plans to strengthen its customer base, expand its enterprise business offerings, and enhance its network infrastructure and wholesale capabilities. Management anticipates low single-digit growth in service revenue and EBITDA. Strategic focus areas include a capital expenditure intensity of 10-12%, with an emphasis on fiber rollout to improve connectivity and boost data center business. The company also aims to extend its enterprise solutions beyond core connectivity to include Internet of Things (IoT) and cybersecurity, alongside boosting consumer offerings through bundling of wireless broadband and content streaming services.

Challenges and Analyst View

Despite the strong performance, the company faces ongoing challenges, particularly the uncertainties surrounding 5G development in the country. Issues related to Digital Nasional Bhd (DNB) could potentially impact future earnings if a put option is exercised. Analysts note that while operating excellence continues, the near-term prospects appear unexciting. The investment bank maintains a Neutral recommendation on the stock with an unchanged target price of RM4.00, citing limited upside but an attractive FY26F dividend yield of approximately 5%.