The Ananda Krishnan-controlled Maxis is one of the four telecommunications companies (telcos) that have submitted bids to the Malaysian Communications and Multimedia Commission (MCMC) for the second 5G network.
The others were CelcomDigi Bhd, Telekom Malaysia Bhd and U Mobile Sdn Bhd, communications minister Fahmi Fadzil confirmed earlier this month. An announcement on the winning bid is expected to be made before the end of the third quarter.
“We believe Maxis stands a good chance to front the second (5G) entity, being one of the earliest to modernise its network for 5G, coupled with the good track record of commercial execution,” RHB said in a note yesterday.
“We believe the controlled capex (capital expenditure) intensity (in 1H 2024) is an attempt to keep its gunpowder dry ahead of the 5G outcome while balancing mid-term dividend expectations,” it said.
AmInvestment Bank concurred that Maxis was holding back on its capex spending, noting that its 1H FY2024 spending fell 25% to RM222 million from RM296 million in 1H FY2023.
“Maxis continued to reduce capex while anticipating the announcement of the winner of the second 5G network spectrum bid at the end of September,” it said in a note yesterday.
In its Q2 FY2024 financial statement released on Wednesday, Maxis guided that capex spending is to remain less than RM1 billion for FY2024, before “any potential financial impact for 5G”.
The group also confirmed its participation in the spectrum tender for the deployment of the second 5G network, adding that it was fully aligned with the government’s decision on the dual 5G network.
“Maxis is fully prepared to start building the second 5G network immediately to accelerate the nation’s 5G plan and bring its economic benefits to Malaysians at a faster pace,” Maxis CEO Goh Seow Eng said last month.
DNB’s share subscription agreement
Early last month, state-run 5G network operator Digital Nasional Bhd (DNB) announced that four operators – Maxis, CelcomDigi, U Mobile and YTL – have completed the share subscription agreement (SSA).
Telekom Malaysia Bhd (TM) was the only carrier that had yet to finalise the SSA as it needed to get approval from shareholders.
Under the terms of the SSA, it is envisaged the five telcos will collectively acquire a 70% equity stake in DNB, with each holding a 14% stake. The government, represented by MoF Inc (under the finance ministry), will retain a 30% stake and a special share in DNB for a designated period.
The SSA stipulates each network operator has the option to quit DNB to participate in the second 5G network.
DNB was set up by the government in 2021 as a special purpose vehicle to develop the country’s 5G network infrastructure, which the telcos are now using to offer 5G services to customers. DNB’s 5G network was deployed by Swedish telecommunications group Ericsson.
In May 2023, the Pakatan Harapan government said the country would shift to a dual 5G model once DNB attained 80% coverage in populated areas, something that was achieved last December.
Maxis’ shares closed 2.6% or nine sen higher at RM3.62 yesterday, valuing the group at RM28.36 billion.