Maxis reports 17.7% profit decline as competition grows

Weaker sales and the rising cost of device subsidies triggered declines in third-quarter revenues and net income at Maxis, Malaysia’s biggest telecoms operator.

While revenues dropped 1.2%, to 2.21 billion ringgits ($723 million), compared with the same period of 2011, net profit was down an alarming 17.7%, to 443 million ringgits.

Maxis (Kuala Lumpur, Malaysia) faces particularly aggressive competition in the mobile-phone sector and has been forced to cut prices and increase device discounts to attract and retain customers.

“Retention and customer loyalty programmes remain a major theme,” said Sandip Das, Maxis’ chief executive.

Those measures did help Maxis to report its first sequential increase in postpaid revenue-generating subscriptions since last year, taking its contract customer base to 3.19 million from 3.16 million last quarter.

But average revenue per user continues to slide, dropping from 110 ringgits per month in the third quarter of 2011 to 106 ringgits a year later.

Voice usage has been falling, with minutes of use (MoU) down to 325 a month from 350 a year earlier.

Although data revenues are growing, the increase has not been enough to offset that fall. Last quarter, Maxis reported non-voice revenues of 961 million ringgits, just 0.9% more than sales during the same period of 2011.

Given the financial setbacks, Maxis is at pains to keep its shareholders onside.

“True to our continued commitment to dividend, we have declared a third interim dividend of eight sen per share amounting to 600 million ringgits to our shareholders this quarter, successfully maintaining our track record of consistent dividend pay-out with the previous quarters,” said Das.

The company also says that overall 2012 capital expenditure is expected to be below guidance, but that spending will increase next quarter, from 145 million ringgits over the last three months.

Among other initiatives, Maxis is preparing to launch LTE, a so-called ‘4G’ technology promising substantial speed-of-service improvements over 3G.

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