KUALA LUMPUR: Maxis Bhd may join forces with U Mobile Sdn Bhd and could potentially acquire some or all of the 28.3 per cent stake that the mobile network operator's largest shareholder, Straits Mobile Investments Pte Ltd has placed for sale, according to Public Investment Bank Bhd (PublicInvest).
The research firm said the role of Maxis in the rollout of the second 5G network remains uncertain, given that the Malaysian Communications and Multimedia Commission (MCMC) has appointed U Mobile for the network's implementation.
"U Mobile is expected to reduce its foreign shareholding to 20 per cent to be aligned with its commitment to ensure greater Malaysian control of the telecommunication network, which is seen as a national strategic asset.
"Given the capital intensity of 5G deployment and U Mobile's high borrowing, we believe it needs a strong strategic partner to share out the cost of 5G investment," PublicInvest said in a note.
With Maxis trading at around a 9.0 per cent discount to its target price of RM3.90 and offering an appealing yield of about 5.0 per cent, PublicInvest has upgraded the stock to a 'Buy'.
Hong Leong Investment Bank Bhd (HLIB Research) has maintained its 'Hold' call on Maxis with a target price of RM3.93.
HLIB Research said Maxis' decision regarding its 5G strategy could affect dividends, presenting some short-term uncertainty.
The telecommunications company reported a 27.5 per cent increase in net profit for the third quarter of 2024 (3Q24), reaching RM366 million.
For the nine-month period of financial year 2024 (9MFY24), Maxis achieved a 14.7 per cent year-on-year rise to RM1.07 billion, primarily due to a 4.4 per cent growth in revenue while costs rose at a more modest rate of 2.0 per cent.
PublicInvest noted that these results were in line with both consensus and the research firm's expectations.
"We maintain our financial year 2024 to financial year 2026 (FY24-FY26) earnings forecasts," it added.