Tuesday, 6 June 2017

(The Star) Maxis remains in top spot, Celcom regains second place

PETALING JAYA: Maxis continued to maintain its lead in the industry in terms of revenue market share (RMS) in Q1, while Celcom regained second place, moving Digi to third place as its RMS declined for the third consecutive quarter.

CIMB Research noted that Maxis’ RMS grew 0.5% pts quarter-on-quarter in Q1 to 39.1%, while Celcom managed to wrestle the position of second-largest telco away from Digi as its RMS inched up 0.1% pt to 30.5%.

In terms of ebitda market share, however, Digi remained at second place.

Digi’s Q1 ebitda market share improved 0.5% pts quarter-on-quarter to 29.4%, while Celcom fell 0.5% pts to 24.3% after a strong Q4 last year.

Meanwhile, Maxis’ ebitda market share remained largely stable at 46.3%, the research house said.

In the first quarter, the mobile industry continued to contract, with service revenue down 3.5% quarter-on-quarter, and down 3.3% year-on-year, with all the top three telcos reporting declines.

“This was largely driven by the fall in prepaid revenue that accelerated to about 6.2% quarter-on-quarter as a result of continued intense competition and partly due to weaker seasonality.

“In contrast, postpaid revenue was largely flat qoq due to seasonally-lower roaming usage, although it was up 4.9% year-on-year, driven by continued growth in subs as a result of prepaid-to-postpaid migration and certain subs signing up for higher-end plans (given the generous amount of data quota),” the research house said.

CIMB Research, which maintained its “neutral” rating on the sector, said it expects industry mobile revenue to stay flat this year due to tight competition and soft macroeconomic conditions.

With little upside to already high EBITDA margins, the research house said it sees flat revenues leading to anaemic earnings growth.

“On the positive side, we expect fewer regulatory shocks as the 700MHz spectrum reallocation is likely to be delayed to 2018F.

“In addition, if mobile market consolidation materialises in the later part of 2017, sentiment on the wider market may also improve on expectation of less competition going forward,” it said in a note.

It said the sector was now trading at a 23% premium over the Asean average FY17F enterprise value/operating free cashflow (EV/OpFCF) of 16.8x.

“We have Hold ratings on all Malaysian telcos, with Axiata as our preferred pick as we expect its earnings to gradually recover from the second half of 2017, driven initially by XL and later on by Celcom in the first half of 2018,” it said.