MAXIS allocates RM200 mln of total capex in 3Q

KUCHING: Maxis Bhd (Maxis) has allocated some RM200 million of total capital expenditure (capex) to roll out fibre-to-the home services in the third quarter of this year (3Q10) via a wholesale arrangement with Telekom Malaysia Bhd (TM).

“As Maxis is targeting 65,000 homes in the initial phase, it depends on the existing 375,000 homes passed for TM’s high speed broadband (HSBB) for the fibre-to-home services,” said an analyst from OSK Research Sdn Bhd (OSK Research).

According to OSK Research, it believed Maxis and TM were finalising the commercial terms of the agreement with an announcement expected soon. It added that the capex was consistent with management’s previous guidance and in line with the research house’s forecast.

The research house pointed out that management intended to rigorously defend its above industry average earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 50 per cent in financial year 2010 (FY10) through a combination of higher yielding value added new services and further cost efficiency.

“Maxis is open to sharing with any telecommunication companies but since DiGi and Celcom have entered into a memorandum of understanding (MOU) until year-end, it would have to wait and see,” the analyst added.

The research house did not rule out the sharing of active infrastructure to save on network and operations and maintenance cost over the longer term.

OSK Research said assuming Maxis achieves its longer-term net debt and EBITDA target of 1.75 to two times from 1.2 times currently, it estimated this would free up cash of up to 50 sen per share that could be returned to shareholders in the form of a special dividend.

The research house was keeping its dividend per share (DPS) forecast for FY10 and financial year 2011 (FY11) at 35 sen per share, which implied a net yield of 6.6 per cent. It noted that at the annual general meeting (AGM), shareholders approved the final DPS of three sen per share for the financial year 2009 (FY09), payable on July 15. It also noted that payment of its recently declared first interim DPS of eight sen per share for FY10 was scheduled for June 30.

OSK Research stated that the key share price re-rating catalysts were more clarity on its capital management plans, which offered scope for special dividends and stronger than expected earnings going forward given that it expected competition in the broadband segment to intensify in the second half of this year.


by Jonathan Chia
Borneo Post