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Maxis’ bottom line hit by TimeCel purchase

28 Aug 2003

Malaysian telco Maxis Communications [Kuala Lumpur: MXSC] has reported a 21% rise in revenues to MYR2.15 billion for the first half of 2003 on the back of strong subscriber additions in Malaysia’s rapidly maturing mobile market. The Kuala Lumpur-based operator, which in December 2002 acquired rival cellco TimeCel for MYR1.48 billion, said half year net profits rose by 5% to MYR518 million from the corresponding period of 2002 as monthly average revenue per user grew slightly to MYR167 for post-paid customers and MYR64 for pre-paid accounts. Despite the healthy balance sheet, Maxis’ profit margin fell from 52% to 49% due to losses and costs associated with its purchase of the country’s third largest operator TimeCel. Maxis said the lower margin resulted mainly from assuming MYR6.8 million of TimeCel’s debt, as well as MYR17 million in costs associated with integrating the new subsidiary.

Malaysia’s mobile market has long been slated for consolidation with six operators serving a population of less than 25 million. Maxis’ new acquisition TimeCel, a former subsidiary of industrial group Time dotCom, recorded a net loss of MYR36.7 million in the six months to 30 June 2003. Although it has never officially released subscriber figures, TimeCel is thought to have had around 1.2 million customers at the end of 2001, but reports began circulating in 2002 that the operator was losing customers hand over fist to its competitors. The rumours were proven true in this morning’s financial release by Maxis, which showed that it inherited just 419,000 subscribers from the purchase of TimeCel. At the end of June 2003 Maxis claimed 3.45 million customers to its own GSM offering, up from 3.25 million three months previously, which when added to the former customer base of TimeCel, pushes Maxis to the head of the Malaysian market with around 39% of the nation’s 9.8 million subscribers, two percentage points ahead of nearest rival Celcom.

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