Friday, November 20, 2009

The day has come.... Maxis Bhd debut on Bursa Malaysia

The first 5 minutes of Maxis Bhd's trading session was amazing. Its shares, opened at a 9.2 per cent premium at RM5.46, was as high as RM5.50 within the first 5-10 minutes.


However, selling pressure was overwhelming. It started to fall to as low as RM5.28 before recovering at the 5.35-5.40 level. At closing, it was at RM5.42. Not too bad for a day one.

Like most media, the publication (Business Times, NST) got the chance to interview Maxis ceo Sandip Das.

Below are some of the key points, or quotes:

1. Hints that company will return higher dividend to shareholders. Analysts are expecting the company to return more than 100 per cent of net profit as dividend.

"We will see a generation of more organic cashflow moving forward. After 2010, capex will start coming down a bit, because we have already invested for the next stage in a big way. So, the delta between the revenue and the net cash will only increase.

"So, organically, we will continue to have a strong cashflow. We also want to make sure at most of the time, we should have an ideal balance sheet, which means we can't be sitting on cash that we did not do anything about it. Either we reinvest it or we pump the money back to the shareholders."

2. On his view of being second, behind Celcom, in terms of the mobile broadband race. (as of first half, celcom has 420,000 customers, while maxis has about 142,000)

"It's still too early to declare leadership in this segment as there's still tremendous growth potential in mobile broadband. Clearly, we want to be the broadband leader."

3. Sandip also explained what went wrong in the first quarter this year, which saw its market share declined by 1-2 percentage points. He attributed it to two factors.

a. The unsuccessful "60-second block" call plan, which draw poor market response.
b. The modernisation of its network. When upgrading work is ongoing, at some point in time, the quality of service may be affected. Naturally, when that happens, customers will reject the services, asking for refunds. So, Maxis for a while, had "freezed" its sales of mobile broadband.

He also said:

"Companies get bruised once in a while, but champions are companies that come back from such situation."

"We are now ready. We have a daily pass, a weekly pass as well as a monthly pass; it's packages for all segments. Of course, we are seeing our sales going up as well."

4. On the importance of broadband experience.

"I can stand in the middle of the street and sell 500,000 mobile broadband packs in one day. But it is pointless if the customer experience is not there."

Tuesday, November 17, 2009

Maxis relisting tomorrow

AFTER all the rumours and speculation, Maxis Bhd, the country's largest mobile operator, will be listed on the local bourse tomorrow (Thursday, November 19).

For over six months, Maxis has been linked with various rumours, including:

1. Maxis-Astro merger (though some believe it is still possible)
2. to merge its Indian operations with Astro's Indian operations.

Speculation intensified when PM, upon returning from Middle East in July, had suggested that Maxis should consider relisting, as it would enhance the local bourse's attractiveness. Maxis responded with "we will consider relisting" type of statement.

All speculation was put to rest when in September, when a Maxis draft prospectus was out on Securities Commission's website. Followed by the prospectus launch end October.

Anyway, below are some of the key information on the IPO:

1. The IPO, to raise more than RM11 billion, will be the biggest in Southeast Asia. At RM11 billion (approx US$3.3 billion), it is larger than the US$1.5 billion IPO by SingTel, US$1.7 billion IPO by PT Telekomunikasi Indonesia, US$1.3 billion IPO by PT Adaro Energy and the US$1.2 billion IPO by PT Indonesia Satellite.

2. Maxis Bhd plans to borrow RM5 billion to repay loan to its parents, Maxis Communications Bhd. (Maxis Communications, post listing, will own 70 per cent of Maxis Bhd)

3. It has got a revolving credit facility of RM1 billion from CIMB Bank Bhd.

4. Although 90 per cent of the 2.25 billion shares were allocated to institutional investors, several funds were unhappy with the allocation they received. Some funds were getting as low as 5 per cent of allocation. (meaning, if the fund apply for 50 million shares at RM5.00, only 2.5 million shares were allocated to the fund) Nevertheless, spoke to some fund managers working for insurance firm, it appeared that they receive bigger allocation.

In fact, in a report by The Edge Financial Daily, OSK Investment Bank appeared to have declined the 1.5 million shares that were allocated to them.

5. The IPO is expected to solve/ part solve Maxis Communications Bhd's funding needs for its Indian operation. It owns about 74 per cent stake in Aircel, which is currently the 6th-9th biggest player in India.

6. For long-term investors, they will be delighted to know that the company has a policy of returning at least 75 per cent of net profit to shareholders.

From my lunch sessions with various analysts, it appears that analysts are expecting the company to return 80-over percent of net profits as dividend. Some analysts wont be surprised if the company returns MORE THAN 100 per cent of net profits to shareholders. This means, the company may return all its nets profits, plus surplus cash, to shareholders as dividend. Of course, all these are mere speculations.

There will be a few more Maxis related posting over the next few days. Sorry for the one-month MIA, will once again, try to update more regularly from now on.

 

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