MAXIS: Priority to cover capex

Distribution of earnings and surplus funds after adequate allocations for capex, working capital

PETALING JAYA: Maxis Bhd reiterates that it generates strong operating cash flows that are sufficient to cover capital expenditure.

Responding to a report, a company spokesman told StarBiz that Maxis’ current gearing level was relatively low, providing balance sheet flexibility which allowed the company to take on additional debt if required, whilst ensuring that debt remained at prudent levels.

For the first quarter ended March 31, Maxis posted a net profit of RM552mil on revenue of RM2.15bil. Its net debt to equity was 0.47 times as at March 31.

It was reported that Maxis was under pressure to declare more dividends as its major shareholder Maxis Communications Bhd (MCB) was facing increasing funding needs for the Indian market.

It also said this would eventually affect Maxis’ profit growth going forward.

The spokesman said the Maxis’ board would continue to “adopt active capital management in the implementation of its dividend policy” to maximise distribution of earnings and surplus funds, after setting aside adequate funding for capital expenditure and working capital.

“This is to ensure that Maxis is well-invested for future growth and has the necessary investment to remain number one and to capitalise on changes in the home marketplace,” the spokesman said.

MCB’s Indian unit Aircel Ltd recently secured 3G and broadband wireless access (BWA) spectra in 13 and eight circles respectively in India.

Apart from the US$1.3bil it had to pay for the 3G licences last month, Aircel is liable for another US$750mil for the BWA licences.

MCB owned 70% of Maxis as at April 19.

When contacted, an analyst said the dividend payout trend in the last two quarters showed that Maxis could pay a higher dividend this year than forecast.

For the first quarter ended March 31, Maxis declared a first interim dividend of 8 sen per share. Last year, it said it planned to pay more than 75% of its annual profit as dividends.

“It is possible that Maxis is helping its sister company fund its expansion in India by its dividend payout,” the analyst said.

Meanwhile, AmReseach has clarified that in yesterday’s StarBiz article Maxis under dividend pressure, Maxis’ net debt to equity ratio should be 45.5% and not as reported.



- by thestar.com.my