Financials

Financial Report For The Quarter Ended 30 June 2018

Get Adobe Reader Note: Files are in Adobe (PDF) format.
Please download the free Adobe Acrobat Reader to view these documents.

Condensed Consolidated Statements Of Profit Or Loss

Condensed Consolidated Statements Of Profit Or Loss

Condensed Consolidated Statements Of Financial Position

Condensed Consolidated Statements Of Financial Position

Analysis Of Performance

Notes

  1. The comparative results were restated due to the adoption of MFRS 15.
  2. Service revenue is defined as Group revenue excluding device, hubbing revenues and network income.
  3. Defined as profit before finance income, finance costs, tax, depreciation, amortisation and allowance for write down of identified network costs.
  4. Service fees accrued for prior years which are were written back in subsequent period.
  5. Charge out of SA renewal costs prepaid for license period.

Performance of the current quarter against the preceding quarter (2nd Quarter 2018 versus 1st Quarter 2018)

For the quarter ended 30 June 2018, service revenue grew by 1.7% to RM2,013 million.

Postpaid service revenue grew by 2.4% to RM1,009 million on account of higher RGS base and ARPU. Postpaid RGS grew by 58k, contributed by the growth in the MaxisONE Plan subscriber base, which has now reached 2.09 million subscribers. Postpaid ARPU grew to RM94 for the quarter. The growth in Postpaid was primarily driven by the strong demand for our innovative device and value-accretive shared line propositions. The Group's recently launched Hotlink Postpaid Flex has also exceeded early launch targets, attracting entry level Postpaid subscribers as well as those migrating from Prepaid to Postpaid.

Prepaid service revenue stabilised to RM854 million (Q1'18: RM849 million). Prepaid RGS continued to decline, albeit at a slower rate, whilst ARPU improved to RM42 per month. Our recently launched new Prepaid pack, Hotlink Red, that provides free non-stop internet on our leading 4G network, has shown positive traction and attracted high mobile internet users. Our higher mobile internet revenue was mainly driven by personalised offerings as we expanded our effective use of data analytics to create value for our customers.

Demand for data continued to grow across all customer segments and the Group ended the quarter with 6.8 million 4G LTE users (Q1'18: 6.5 million). Blended smartphone penetration stood at 83% against 82% in the previous quarter and blended data usage increased to an average 9.1GB (Q1'18: 7.7GB). The Group's leading 4G LTE network coverage of 92% on a comparable peer basis remains a key differentiator for customers to enjoy the best video quality experience in Malaysia. The Group achieved another all-time high touch point net promoter score of +57.

Normalised EBITDA declined marginally by 1% to RM1,007 million with a 50.0% normalised margin on service revenue, against RM1,020 million and 51.5% respectively in the previous quarter. This was mainly due to higher marketing costs and realised foreign exchange losses that offset the increase in revenue. Consequently, the Group reported lower normalised profit of RM480 million compared to RM510 million in the preceding quarter.

Capex for the current quarter almost doubled to RM212 million. The increase was mainly attributed to network capacity capex to support our strong data traffic growth. Free cash flow improved to RM541 million mainly due to movements in working capital as well as the upfront spectrum assignment fee that was paid in the previous quarter.

Performance of the current quarter against the preceding year corresponding quarter (2nd Quarter 2018 versus 2nd Quarter 2017)

Service revenue for Q2 2018 of RM2,013 million was 2.7% lower than Q2 2017, mainly due to the decline in Prepaid, which offset the growth in Postpaid and Home Fibre business.

Postpaid service revenue grew by 6.7% to RM1,009 million in the current quarter. The strong growth was supported by the solid subscription base, which has continued to grow since 3Q 2016 and has reached close to 3 million subscribers. MaxisONE Share continued to be a strong catalyst driving incremental port-ins supported by innovative value-accretive shared line propositions. Postpaid ARPU remained high at RM94.

Prepaid service revenue declined 13.0% to RM854 million, on the back of a lower subscription base which was impacted by the continued SIM consolidation, migration from Prepaid to Postpaid and intense price competition. Mobile internet revenue remained high at 56.2% of Prepaid revenue which contributed to the stable and high ARPU of RM42. This was supported by the encouraging response to the recently launched Prepaid pack, Hotlink Red, which has attracted high data users.

Data consumption continued to increase with blended data usage almost doubling from a monthly average of 5.0GB a year ago to 9.1GB. The Group continued to lead the market in terms of coverage, quality and best digital experience. As mentioned above, the Group achieved another record-breaking touch point net promoter score of +57 compared to +50 in Q2 2017.

Normalised EBITDA remained stable at RM1,007 million with a margin on service revenue of 50.0% against RM1,006 million and 48.6% respectively in Q2 2017. This was mainly attributed to the continuous cost optimisation initiatives that offset the lower service revenue.

Consequently, normalised profit for the quarter was stable at RM480 million (Q2'17: RM482 million)

Capex for the current quarter remained stable at RM212 million. Free cash flow for the quarter was RM541 million, compared to RM290 million in Q2 2017 mainly due to working capital changes.

STATEMENT OF FINANCIAL POSITION

Notes

  1. Debt includes derivative financial instruments designated for hedging relationship on borrowings but excludes vendor financing.

There is no material change to the total assets. The net earnings for the six months under review, after a total 10 sen dividend distribution increases the equity of the Group to above RM7 billion mark.

The reduction in deposits, cash and bank balances was mainly due to the upfront spectrum assignment fee paid during the six months ended 30 June 2018. This has resulted in an increase in net debt-to-EBITDA from 1.63x as at 31 December 2017 to 1.70x as at 30 June 2018.

PROSPECTS FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2018

Market is expected to remain competitive but Maxis continues to focus on maintaining its leadership position by leveraging on its strong 4G LTE network with its leading coverage and speed.

In the Postpaid market, we will focus on building upon our flagship MaxisONE Plan as we continue to innovate value accretive family-centric offerings and innovative device propositions. In the Prepaid market, we will maintain our focus on high mobile internet users and profitable segments particularly in the foreign worker segment, whilst expanding our use of data analytics for segmental offerings to drive incremental ARPU.

In view of the above but taking into account the impact from progressive termination of a network sharing arrangement, we maintain our guidance for the financial year ending 31 December 2018 with service revenue and EBITDA to decline by mid-single digit and high single digit respectively, base capital expenditure to be around RM1.0 billion and free cash flow (excluding upfront spectrum assignment fees) is expected to be at a similar level to financial year 2017.