MAXIS may raise RM4.5b to expand, repay debt

MAXIS Bhd, Malaysia’s biggest mobile-phone operator, is preparing to raise as much as RM4.5 billion to upgrade its network and pay back debt, Chief Financial Officer Rossana Rashidi said.

The carrier, controlled by billionaire T. Ananda Krishnan, is in talks with bankers to weigh options that include the company’s first sale of bonds, Rossana said in an interview yesterday. Maxis may raise the funds in the next three to six months, she said.

The funds would help the Kuala Lumpur-based company invest 1.4 billion ringgit on its mobile-phone and broadband networks as revenue from voice calls shrinks. Analysts estimate Maxis’s profit will climb to RM2.46 billion this year, fueled by demand for wireless Internet access.

“They need to raise long-term money to be used for capital expenditure and a combination of other things,” said Jeffrey Tan, an analyst at OSK Research Sdn. “Perhaps a special dividend is one of them.”



OSK has a “neutral” rating on Maxis and a share-price estimate of RM5.80.

Maxis fell 0.2 per cent to RM5.30 in Kuala Lumpur at 10 a.m. local time, while the country’s benchmark index rose 0.7 percent. The stock has shed 1.3 per cent this year.

Paying Back Debt

The company will use RM2.5 billion of the proceeds to repay a bridging loan and the rest for capital expenditure, she said. Maxis’s initial public offering, Southeast Asia’s biggest, raised RM11.2 billion for the parent in November.

Maxis and its parent, Maxis Communications Bhd, don’t have debt ratings. Binariang GSM Sdn Bhd, which owns a controlling stake in Maxis Communications, is rated AA3 by Rating Malaysia Bhd, one of two Malaysian rating companies. That’s Rating Malaysia’s fourth-highest rating.

The mobile-phone operator is exploring both Islamic and conventional financing, Rossana said. It is also considering whether to use ringgit or dollars, she said.

The company had RM8.32 billion in liabilities as of March 31, according to data compiled by Bloomberg.

Profit is poised to climb 56 per cent to RM2.46 billion this year, according to the average of 26 analyst estimates compiled by Bloomberg. The company, which has more than 12.6 million subscribers, posted profit of RM552 million last quarter.

Maxis wants to expand its third-generation network to reach 80 percent of Malaysia’s population by the year-end, it said in yesterday’s statement.

“Clearly, there’s a lot of pressure on voice,” Chief Executive Officer Sandip Das said in an interview. “The next revenue is going to come from underserved geography, data and broadband. That’s where the company is investing big time.” - Bloomberg