News Maxis and REDtone have entered into an infrastructure
and spectrum sharing agreement to fast track their rollout of 4G networks
throughout the country.
4G LTE services are targeted to be launched by both companies
early next year in selected areas of the Klang Valley.
The combined spectrum will allow both companies to offer the
fastest 4G broadband speed in the country of up to 150Mbps.
Comments We view this as a win-win situation
for both parties. Maxis will receive a new source of revenue, although we are
unable to gauge the quantum at this juncture, and further enhance the utilisation
of its network in areas that are currently underutilised. For REDtone, the
collaboration will enable the company to accelerate its rollout to cover 50% of
the country’s population.
Although the authority has yet to conclude the allocation
for the 4G spectrum, the collaboration has enhanced both parties’ chances in
securing the license given that the authority has set network collaboration as
one of the several conditions that each party need to comply with before any
licences are issued to them.
Outlook Maxis remains as
a solid high-yield play given its firm 40.0 sen DPS in the next 1-2 years.
However, its ability to maintain its market share remains
doubtful at this juncture in our view.
There could also be a potential erosion in its EBITDA margin
as a result of an aggressive rollout of its FTTH plan.
Forecast No changes in our FY12-FY14
earnings forecasts.
Rating Maintain MARKET PERFORM
The company’s current strategy in focusing on customers
retention instead of maintaining its margin may add pressures to its near term
financial performance.
Valuation Maintaining Target Price at RM6.76
based on a targeted FY13 EV/forward EBITDA of 11.4x (+1.5SD).
Risks Higher than expected margin pressure. Continuing
loss in market share to its peers.
Source: Kenanga
No comments:
Post a Comment