Malaysian Telcos’ Q3 2016 report card: Who’s the winner?: Page 2 of 4

Total revenue and service revenue

In late October, Celcom Axiata Bhd – a wholly-owned unit of Axiata Group Bhd – has revamped its FIRST postpaid plans. The new plans essentially involves giving customers more mobile data (increase of 100% to 200% depending on the plans customers subscribed to). In about a week or so, Maxis reacted, and announced that it will also be giving customers more data.

Ladies and gentlemen, this is how competitive the Malaysian mobile telecommunications landscape.

Despite the intense competition, it is surprising to see that Maxis has somehow managed to grow its service revenue market share in Q3 2016. Over a year ago (in 1H 2015), its service revenue market share stood at 39%, and in first half 2014, it was 37.7%. (Note: Service revenue does not include the sales of mobile devices)

A look at how these mobile operators performed in the third quarter revealed that all operators recorded lower revenue and service revenue – with Maxis registered the smallest decline of RM50 million (total revenue) and RM70 million (service revenue).

Celcom is the biggest loser in terms of revenue – as its total revenue for the nine month period shrank by over RM500 million at RM4.97 billion (9M 2015: RM5.53 billion) and total service revenue declined by RM590 million at RM4.50 billion.

For the first nine months this year, total revenue and service revenue by the three incumbents totalled at RM16.3 billion and RM15.46 billion, respectively. A year ago, the total revenue and service revenue by these Big 3 were RM17.17 billion and RM16.21 billion, respectively.

Postpaid revenue

Maxis continues to flex its muscle in the postpaid space, as it extended its market share to 46% in the third quarter (versus 45.61% a year ago), with a postpaid revenue of RM2.93 billion.

Celcom, which grew its postpaid subscriber’s market share in Q3, is the only player among the incumbents to suffer a decline in postpaid market share at 31.24%.

One of the reasons Maxis is able to grow its postpaid revenue market share is the success of its MaxisONE Plan – which now has some 1.5 million customers (or about half of its total postpaid subscriber base).

Prepaid revenue

Digi continues to dominate the prepaid space, with a commanding 38.55% market share, on the back of RM3.23 billion revenue.

Although Celcom appears to have start to gain momentum on its postpaid front, it is still facing challenges in the prepaid segment. It is now more than 12 percentage points behind Digi, and almost 10 percentage points behind Maxis.

Nevertheless, the parent company Axiata appears to be optimistic that Celcom is able to turnaround its fate in the near future.

Meanwhile, Maxis appears to be closing down on Digi in the prepaid space, as it is now less than 3 percentage points away from Digi. A year ago, they were 3.3 percentage points apart. It will be interesting to see if Maxis could regain its lead in the next few quarters.

The bottom-line

During the third quarter, Maxis outperformed its rivals in terms of profitability and margins. While it is not surprising to see Maxis leading in terms of net profit, it was somewhat a surprise to see the company maintaining an Ebitda margin of over 52%.

For the nine months ended September 30, 2016, its Ebitda margin expanded to 52.5% from 51.9% a year ago. The expansion is mainly thanks to its Q3 performance of 53.9% Ebitda margin.

Meanwhile, Celcom did not enjoy similar fate. The company – which experienced over 40% Ebitda margins throughout last year – saw its margins declined to under 40% this year. In the third quarter, its Ebitda margin stood at 35.1%.

Next page: Who spends more on their network?