Maxis revenue up 4% to US$2.13b in 2023, net profit declines 13.8%

• EBITDA of US$829 million, up 0.8% year-on-year
• Guiding for low single-digit increase in service revenue in 2024

A solid 4Q2023 revenue growth of 7.4% to US$574 million (RM2.74 billion) from US$534 million (RM2.55 billion) a year ago from mobile service provider Maxis Bhd, was marred by RM73 million in assessments and penalties by tax man, IRB (Internal Revenue Board), causing its net profit for the quarter to drop 76% to RM56 million versus RM233 million over the same corresponding period in 2022.

[RM1 = US$0.209]

For the full year, revenue increased 4% to RM10.18 billion from RM9.79 billion while net profit declined 13.8% to RM993 million, from RM1.15 billion for FY2022.

"We delivered solid results in keeping with our promise of sustainable growth,” said Goh Seow Eng (pic), Maxis CEO, in a statement. "We will continue to build upon our solid foundation, ensuring we stay laser-focused on providing the best customer experience," he added.

Growth in Consumer and Enterprise segments

Maxis delivered a solid full year performance in the financial year ended 31 Dec 2023, with a 5-year high in service revenue and earnings before interest, tax, depreciation, and amortisation (EBITDA).

Driven by growth in consumer mobile and fibre, along with enterprise connectivity and digital solutions, the company’s service revenue grew 2.8% year-on-year (YoY) to RM8.57 billion. This resulted in EBITDA of RM3.96 billion and normalised Profit After Tax (normalised PAT) of RM1.35 billion.

Maxis’ Consumer business grew 3.7%, surpassing the RM7 billion service revenue mark for the year. Postpaid revenue increased 7.5% YoY in tandem with subscriber growth. Despite being late to the market with its 5G services, since introducing its 5G plans in August 2023, Maxis said it has expanded 5G offerings across all its mobile plans. Home broadband subscribers grew to 750,000 households which is 5.8x larger than the 131,000 subscribers CelcomDigi has.

Meanwhile, its Enterprise business was not slowed by the reduction in its headcount last year as part of the three-year programme to right-size its workforce as evidenced by the overall revenue growth of 6.4% from growth in all product categories, including mobile, fixed connectivity and enterprise solutions, contributed by contract wins.

For 2024, Maxis is guiding for a low single-digit increase in service revenue, and for Ebitda to remain relatively unchanged. It aims to keep capital expenditure under RM1 billion for the year after a RM813 capex investment last year which was itself a drop of 27% from 2022.

It declared an interim dividend of four sen per share for the quarter, bringing its full-year dividend payout to 16 sen per share.

FY2023 financial highlights: FY2023 vs FY2022

• Service Revenue increased by 2.8% to RM8,572 million, driven by revenue growth in both its Consumer and Enterprise businesses.
  
  • Postpaid mobile maintained momentum with healthy subscriber growth of 7.6%, bringing the total number of postpaid subscriptions to 3.60 million. It has widened its range of Postpaid plans to cater to a wider market, including its enhanced 5G Postpaid offerings. This contributed to the 7.5% growth in revenue to RM3,520 million.
  • Prepaid mobile subscriptions grew by 1.6% to 5.88 million, contributing to revenue of RM2,619 million. The segment remained resilient amidst strong competition as the Company continues to strengthen its Hotlink offerings to ensure optimal value proposition for customers, especially in focus segments such as youths and under-represented regions.
  • Home Connectivity registered healthy revenue growth of 9.7% YoY to RM925 million. This was contributed by 12.1% growth in home connections, with total subscribers crossing the 750,000 mark due to strong fibre uptake.
  • Enterprise revenue (excluding wholesale voice) grew by 6.4% in FY2023 to RM1,508 million. In the fourth quarter, the segment added multi-year contracts across various Enterprise segments, providing mobile and fixed connectivity solutions, internet of things (IoT) solutions, cloud and managed services. The Company is also doubling down on integrated connectivity solutions in areas such as smart mobility and electric vehicles (EVs).
• EBITDA maintained resilience at RM3,960 million as the company’s cost optimisation measures complement its revenue growth.
• Normalised PAT of RM1,353 million. Including one-off and non-cash adjustments, the Company’s reported PAT stood at RM992 million.
• Capex of RM813 million with a tight focus on ensuring optimal investment to support capacity growth, fibre build and digitalisation. Maxis continues to invest selectively in key areas, including its regional internet hubs in Sabah and Sarawak during the year.
• Operating free cash flow eased to RM2,853 million, affected by tax payments in the year and an advance payment pursuant to the conditional Share Subscription Agreement (SSA) in relation to Digital Nasional Berhad (DNB). Cash balance remained stable at RM569 million.

Key initiatives in 2023:

• Entered into a strategic partnership with Telekom Malaysia to provide 4G Multi Operator Core Network (MOCN) as well as 4G and 2G Domestic Roaming Services to benefit subscribers in rural and urban areas nationwide.
• Supported the government’s call for affordable connectivity and devices with Pakej 5G RAHMAH and Insentif Postpaid Penjawat Awam, in line with the Ekonomi MADANI framework.
• First telco to build Regional Internet Hubs in Kuching and Kota Kinabalu, providing customers in East Malaysia with superior user experience through higher speeds and lower latency, with direct international content connectivity.
• Launched new 5G mobile plans with attractive value for all segments, with a focus on affordability and adoption.
• Launched new fibre plans to provide better overall experience and value, including first-time ever 1Gbps and 2Gbps.
• Extended the Company’s agreement to access TM’s High-Speed Broadband (HSBB) premium services until 2029.
• Executed conditional Share Subscription Agreement (SSA) for the proposed equity stake in DNB.