This was a bad decision by Maxis. The bottom line could be affected coming towards the end of the year. With dwindling customers and uninspiring new products, this will exacerbate rough cashflow in the short term. Morten, what were you thinking?? You only care about the shareholders. What about the staff?
On Monday, Maxis Bhd announced its acceptance of MCMC offer for the spectrum assignments of 2 x 10MHz of 900 MHz and 2 x 20MHz of 1800MHz and said it would be paying the spectrum fee of RM816.75mil through a one-off payment.
Analysts said Maxis’ move to finance the spectrum assignments via the lump-sum payment would have a slight impact on its balance sheet in the short-term.
JF Apex Securities Bhd foresees that while Maxis would stress its balance sheet in the short-term by defraying the spectrum fee in a lump-sum payment, the telecommunication player would incur a lower spectrum fee as opposed to paying for the spectrum by instalments.
It said the hefty spectrum fee will be financed largely by external borrowings, which are expected to cause Maxis’ net-debt-to-earning before interest, tax, depreciation and amortisation (EBITDA) to jump to 2 times from 1.68 times in the third quarter of 2016.
The research house lowered its dividend forecast for financial year 2017 (FY17) to 16 sen per share, compared to 20 sen per share.
However, FY16 dividend forecast of 20 sen per share is expected to be intact as spectrum fee payment is only due in 2017.
Meanwhile, Kenanga Research trimmed its earnings forecast for FY16 and FY17 marginally by 0.1% and 0.8%, respectively, after imputing higher finance cost and direct expenses.
The research house believes that the spectrum fee is likely to be financed through the recently announced Unrated Sukuk Murabahah Programme, which allowed Maxis to raise an aggregate nominal value of up to RM10bil over tenure of up to 30 years.
The proceeds will also be used to finance its internal re-organisation exercise, capex, working capital requirements, general corporate purposes as well as refinancing any Sukuk Murabahah.
Maxis has issued the first series of the Sukuk Murabahah amounting to RM840mil in July followed by another RM500mil in late October.
Kenanga Research noted that apart from the one-off spectrum fee to be paid by Maxis, the telco player needs to pay a fixed annual spectrum maintenance fee of RM70.25mil for upholding the spectrum frequency.