5 interesting facts from Maxis’ Q1 2016 results

 
MALAYSIA’S largest mobile operator Maxis Bhd has just released its first quarter (Q1) 2016 results, reporting net profit had marginally increased to RM484 million, while service revenue remained unchanged from the same period a year ago at RM2.13 billion.
 
READ ALSO: Maxis Q1 2016 profits marginally up, thanks to postpaid
 
Digital News Asia (DNA) takes a deeper look at what this all means:
 
1) QoQ revenue declines in Q1 are no longer surprising
 

 
Based on historical data, Maxis and most other telcos generally post weaker Q1 financial numbers compared with their preceding Q4 results.
 
In fact, over the past six Q1s (2011-2016), Maxis posted quarter-on-quarter (QoQ) growth just once, and that was in the first quarter of 2015.
 
Don’t panic though – after all, telcos tend to spend more on marketing campaigns during the second half to generate usage and excitement. It’s like a great football match.
 
2) Mobile Internet penetration hits a plateau?
 

 
For the past few quarters, mobile Internet penetration has been experiencing slow growth, at about 1% per quarter, but it still surprising to see the number declining in Q1.
 
Perhaps this was driven by the declining trend of Maxis’ overall postpaid subscriber base – most such customers subscribe to some sort of data plan.
 
It will be interesting to see if the company’s aggressive push for its MaxisOne plan would be able to address the overall decline of postpaid customers in the long run.
 
3) Subscribers with LTE devices doubled
 

 
During Q1 2016, Maxis’ subscribers with LTE devices doubled to 3.26 million, versus 1.61 million a year ago.
 
This further inks its position as the company with highest smartphone penetration rate in Malaysia, as high as 77%.
 
Maxis is also the only mobile operator in the country that discloses its smartphone penetration rate for both its postpaid and prepaid customer base.
 
A possible concern is that its smartphone penetration rate is nearing the peak … or is there still room for growth?
 
4) Crazy margins
 

 
Before you get a headache looking at all those numbers above, focus on the highlighted area:  The EBITDA (earnings before interests, taxes, depreciation and amortisation) margin.
 
Despite the company’s accelerated depreciation policy, Maxis still managed to consistently report an EBITDA margin of over 50%.
 
Accelerated depreciation reduces the value of assets at a faster pace. For example, an asset that is purchased at RM10 million may usually have a 10-year lifespan, translating to an RM1-million depreciation a year.
 
However, in Maxis’ case, it may opt to reduce the value of assets over a five-year period instead, resulting in an RM2-million depreciation a year.
 
A more than 50% EBITDA margin consistently puts the company at the top spot in terms of margin management.
 
Celcom Axiata had a 2015 EBITDA margin of 41.9%, while Digi.Com had 43%.
 
READ ALSO: Celcom CEO: The Blue is back!
 
5) In love with data

 
Not entirely surprising – Maxis customers are hungry for data, and I am sure the other operators’ customers are the same as well.
 
What is interesting is that Maxis is tracking its customers’ data consumption, and is open to sharing that information publicly. Celcom and Digi do not disclose how much data their customers consume a month.
 
As consumers watch more videos online, do not be surprised if the overall data volume hits 60TB (terabytes) by the end of this year.
 
“It is obvious that Malaysians love the Internet and they want much more of it,” says Maxis chief executive officer Morten Lundal.
 
“For Maxis, it is not just about providing lots of data, but about enabling our customers to do more with their data on Malaysia’s No 1 network,” he declares.
 
Related Stories:
 
Maxis ‘won’ 2015, says CEO Morten Lundal
 
Slugfest: How Malaysia’s Big 3 performed in 2015
 
Maxis says strong Q1 fuelled by transformation initiatives
 
 
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