MAXIS: Earnings Meet Expectations Driven by Cost Efficiencies, Hold Rating Maintained

A recent investment bank research report indicates that the company’s core earnings for the first nine months of fiscal year 2025 (9M25) reached RM1.2 billion, marking a 9.3% year-on-year increase and aligning with both the bank’s and consensus expectations. The robust performance was primarily attributed to effective cost management and operational efficiencies.

Performance Review

During the 9M25 period, total revenue stood at RM7.8 billion, a slight decline of 0.1% year-on-year. This marginal dip was mainly due to a 0.8% year-on-year reduction in consumer service revenue, influenced by commercial arrangements for the Maxis Device Care program and a decrease in regulated interconnect rates. However, this was largely mitigated by a 3.3% year-on-year growth in enterprise revenue, driven by an expansion in mobile subscriber base and higher wholesale service contributions.

The company demonstrated a mixed operational performance in the third quarter of 2025 (3Q25). Postpaid subscriber numbers saw a healthy increase of 1.2% quarter-on-quarter and 7.7% year-on-year, reaching 4.1 million. Conversely, prepaid subscribers grew marginally by 0.1% quarter-on-quarter and 0.2% year-on-year to 5.8 million, continuing to face pressure in the price-sensitive segment. Service revenue remained relatively stable at RM2.2 billion (+1.7% quarter-on-quarter), supported by a 1.4% quarter-on-quarter rise in Average Revenue Per User (ARPU) to RM35.80, a result of targeted product offerings. The company declared a third interim dividend per share of 4 sen, bringing the cumulative 9M25 DPS to 12 sen, consistent with the previous year.

Operational Efficiencies and Challenges

A significant highlight was the expansion of the EBITDA margin by 1.5 percentage points year-on-year, reaching 41.9%. This improvement was a direct consequence of lower operating expenses and ongoing cost optimisation initiatives. Despite these efficiencies, the company faces persistent challenges including uncertainty surrounding Malaysia’s 5G deployment timeline and the complexities of multi-party coordination, which could potentially impact its share price. Furthermore, intensifying price competition among telecommunication operators and a slower-than-expected economic growth pose downside risks.

Future Outlook and Recommendation

Management has provided guidance for modest growth in 2025, targeting low single-digit service revenue growth and flat-to-low single-digit EBITDA growth, alongside capital expenditure of approximately RM1 billion. Upside risks include stronger service revenue growth and positive developments in the 5G implementation plan.

The investment bank maintains a HOLD rating on the company with an unchanged 12-month target price of RM3.64. The recommendation reflects a balanced view of positive earnings momentum driven by cost management, offset by ongoing uncertainties in the market and regulatory environment.