Financials

Financial Report For The Quarter Ended 31 March 2018

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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 (1st Quarter 2018 versus 4th Quarter 2017)

For the quarter ended 31 March 2018, the Group recorded service revenue of RM1,980 million.

Postpaid service revenue declined marginally by 0.9% to RM985 million and ARPU moderated to RM92, mainly due to seasonality including lower roaming revenue. The Group continued to grow its Postpaid revenue generating subscriptions, adding 71K new MaxisOne Plan ("MOP") subscribers. This growth was primary driven by the strong demand for our innovative device and shared line propositions. The Group's recently launched Hotlink Postpaid Flex gained positive traction, attracting entry level Postpaid subscribers as well as Prepaid to Postpaid migrating subscribers.

Prepaid service revenue declined by 6.0% to RM849 million. The decline was due to the lower subscription base which was impacted by SIM consolidation, intense price-focused competition and migration from Prepaid to Postpaid. We have however also recently launched our new Prepaid pack, Hotlink Red, that provides free nonstop internet on our leading 4G network, and the take-up has been encouraging. We continued to attract high mobile internet subscribers, which contributed to the stable Prepaid ARPU of RM41.

Demand for data continued to grow as consumers increasingly embrace digital lifestyles. The solid momentum in 4G LTE adoption continued with 6.5 million 4G LTE users (Q4'17: 6.2 million). Blended smartphone penetration stood at 82% against 81% in the previous quarter and blended date usage increased to an average 7.7GB (Q4'17: 6.7GB). 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 +54.

Normalised EBITDA declined by 2.5% to RM1,020 million with a 51.5% margin on service revenue, against RM1,046 million and 51.4% respectively, mainly driven by the lower service revenue. However, the positive results from continuous cost optimisation initiatives contributed to the lower direct cost, and operation and maintenance cost, of which together with the lower realised foreign exchange losses, partially offset the decline in service revenue.

Normalised profit was however stable at RM510 million (Q4'17: RM520 million) mainly attributable to the lower depreciation charges.

Capex was RM107 million, a decrease from RM382 million in the previous quarter, mainly due to lower spend on network capacity. The decline in free cash flow to RM165 million was mainly due to the upfront spectrum assignment fee paid in the current quarter and working capital changes.

Performance of the current quarter against the preceding year corresponding quarter/YTD (1st Quarter/YTD 2018 versus 1st Quarter/YTD 2017)

Service revenue for Q1 2018 of RM1,980 million was 4.6% lower than Q1 2017, mainly due to the decline in Prepaid, which offset the growth in Postpaid.

Postpaid service revenue grew by 5.2% to RM985 million in the current quarter. The growth was supported by the strong subscription base, with 168k more Postpaid RGS as we continued to offer innovative device and shared line propositions. Postpaid ARPU moderated marginally to RM92 against a larger subscription base of 2.9 million.

Prepaid service revenue declined 15.5% to RM849 million, on the back of a lower subscription base which was impacted by the continued SIM consolidation, migration to Postpaid and intense competition, as mentioned above. Mobile internet revenue remained high at 52.9% of Prepaid revenue which contributed to the relatively stable ARPU of RM41.

The Group continued to see solid momentum in 4G LTE adoption with 6.5 million 4G LTE users from 5.1 million a year ago the Group's expanded. 4G LTE network with a 92% population coverage on comparable peer basis remains a key differentiator as we lead the market in coverage, quality and customer experience. In addition, the Group recorded an all-time high touch point net promoter score of +54 in the current quarter compared to +47 in Q1 2017.

Normalised EBITDA remained stable at RM1,020 million with a margin on service revenue of 51.5% against RM1,024 million and 49.3% respectively in Q1 2017. This was mainly attributable to the continuous cost optimisation initiatives that offset the lower service revenue.

Consequently, normalised profit for the quarter was stable at RM510 million (Q4'17: RM510 million)

Capex for the current quarter decreased to RM107 million, mainly attributable to lower spend on network capacity. Free cash flow for the quarter was RM165 million, compared to RM274 million in Q1 2017 mainly due to the upfront spectrum assignment fee paid during the current quarter.

STATEMENT OF FINANCIAL POSITION

Notes

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

There were no material changes to the total assets and equity.

The reduction in deposits, cash and bank balances was mainly due to the payment of dividends as disclosed in Note 7, as well as the upfront spectrum assignment fee paid during the quarter. This has resulted in an increase in net debt-to-EBITDA from 1.63x as at 31 December 2017 to 1.77x as at 31 March 2018.

PROSPECTS FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2018

Maxis is committed to empower our customers increasingly digital lifestyles, leveraging on our leading 4G LTE network and innovative product offerings to provide unmatched customer experiences. We remain focused on our digital transformation journey as we enhance our digital capabilities to be a new key differentiator.

Market competition is expected to remain intense. In the Postpaid segment, we will continuously build upon our solid flagship MaxisONE plan with innovative product offerings. In the Prepaid segment, we will maintain our focus on engaging high mobile internet users, offering differentiated digital propositions. As we fully embrace digital technologies, we will extend our effective use of analytics in crafting our product propositions and will enhance our segmental offerings to bring value to our customers.

In the previous quarter, based on the accounting standards then, we guided for financial year 2018 service revenue to decline in low single digits, EBITDA declining at mid single digit level, base capital expenditure of around RM1.0 billion and free cash flow (excluding upfront spectrum assignment fees) to be at a similar level to financial year 2017.

Whilst we are not changing the underlying basis of the above guidance, our guidance will now reflect the changes in the accounting treatment required under MFRS 15. Accordingly, service revenue and EBITDA are expected to decline at mid single digit and high single digit levels respectively. There is no change to our guidance for base capital expenditure and free cash flow arising from the adoption of MFRS 15.