Both companies are
expected to jointly develop as well as co-market the consumer packages,
targeted to be launched to the market by year-end, in phases.
Via the partnership,
Maxis has been appointed the fibre broadband service provider for Astro’s
B.yond IPTV to expand the current service footprint. Astro meanwhile, will be
the IPTV service provider for all Maxis’
fixed and wireless platforms.
On top of that, both
companies have also tied up a co-marketing mobile partnership for Astro
On-The-Go services to Maxis customers. Currently, this service is available to
all existing Astro customers and will be
available to non-Astro customers by year-end.
Comments While we believe the landmark strategic
partnership will enable both companies to leverage on the synergies of each
party’s strengths and experiences, the ultimate package prices and contents
will likely be the two key factors to determine the joint package take-up rate
going forward.
We understand that as
of 2Q12, Maxis Home had a total of over 57k customers on board, 9.35k on Home Fibre
Internet and over 27k as its Home Wireless Internet subscribers with the
balance being ADSL and POTs subscribers. The segment has generated RM13m in
turnover but suffered a loss of RM21m at the EBITDA level. In view of the
current sluggish performance of this segment, we have not imputed any
contribution here yet into our financial model.
Outlook Maxis
remains as a solid high yield play given its firm 40.0 sen DPS in the next 1-2
years.
However, potential
margin erosions are expected as a result of the aggressive rollout of its Home
Fibre plan.
Forecast No changes in our FY12-FY14 earnings
forecasts.
Rating Maintain MARKET PERFORM
The company’s current
strategy is focusing on customer retention instead of maintaining its margin may
add pressure to its near term financial performance.
Valuation Maintaining our Target Price at RM7.35 based
on a targeted FY13 EV/forward EBITDA of 13.0x (+3SD).
Source: Kenanga
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