Wednesday, November 11, 2009

Mutterings On Maxis


Apple Logo maxis_logo



I tried to evade the question on Maxis, but everyone seems to be keen to find out more on Maxis. During the talk, the Maxis thing came up during Q&A time. Short answer, it will go up, possibly hold above RM6.00-6.50 for the medium term but could stay locked in that range for a long time.

a) Owners are selling 30%, no new shares issued, money going to the pockets of owners. Not necessarily a bad thing, but it goes to show that not much of reinvestment is planned. Not much reinvestment means "not much growth and excitement, and a lot less risk" - but what is Maxis if you are not buying their expertise in running telco operations, why are you paying for people who are turning into just gatekeepers, just maintaining the operations. Getting to be another dividend stock?

b) Malaysian telcos are trading at a steep premium to their regional peers. Some fund managers have said they will most likely own a smaller portion of Maxis shares in their portfolios than the stock’s actual weightage in the benchmark FTSE Bursa Malaysia KLCI. Maxis above RM6.00 is already very pricey. However, it is likely to stay above that because the local institutions will be picking up more shares and the cornerstone institutional investors (with the exception of Fidelity) will not be selling as they "need to have sufficient exposure to a critical component of the index - as explained during my talk). So, who will be selling??? .... well, if it goes beyond RM6.50, I think even Ananda and the Saudi owners will sell in the open market.

c) Maxis is this company is a different animal now compared to seven years ago. The market is already saturated with very little room for growth regardless whether in the postpaid, prepaid or wireless broadband segment. So, no growth story, the bulk of the growth trend has been in the past, now its jockeying for market share, and usually that is largely churning and will only result in a lot of work for their respective marketing folks but the revenue will come with very thin margins. Hence, Maxis’ latest sexy offering is of course the exclusive partnership with Apple Inc.’s is a good thing but will need keep getting hits out of the park to really dent the competition.

d) The reason why I am loathed to write about Maxis is that the company made its money from the Malaysian public, and we all have had to endure a lot of "cumbersome technical glitches, capacity issues, dropped calls, etc..." When the going was good, they took it private but obviously knowing that there is likely to be an even better offer to sell Maxis to somebody else, not nice, smart biz but poor form. Now, I don't know for what reason, they choose to relist a likely "dividend counter", with such a pathetic offering to the public. Did Maxis forget who the fuck gave them the revenue and critical mass in the first place. Yes, the Maxis dealers got some, and a very limited number preferred customers did get something... what about the rest, the company was built by selling solely to Malaysians. There was no acknowledgment of that from the offering. The entire offering was passed to institutions and basically Maxis want loyal Malaysians to buy the shares from the institutions in the open market - hey, thanks!

11 comments:

WINDSLIDER said...

Honest and Frank opinion. That's what makes you stand out from the crowd. You have my full respect.

tohff7 said...

They already sucked every cash possible from Maxis before listing it

see said...

Maxis is saying: But hey, there is growth in wireless broadband! LOL! But you are right, price will rise when listed cos of captive cornerstone investors & institutionals wanna be indexed & those retailers will probably chase up the stock. Another note, Axiata looks interesting, esp its Indonesia market

mr. lim said...

You hit the nail right on the head. Very direct, no punches being pulled back. That's what we call to catch the bull by its horn.
I think Ananda decided to relist maxis due to call by our PM. But he miss on the subject of customers are king by just allocating tiny weenie bit to us (Maxis users) Sigh!

clk said...

You took the public money when it was delisted 2 yrs back through an unacceptable arrangement. Now you want more more $!

I've moved to Digi as a subscriber when portability took place.

Fortunately for you "There is a sucker born every second" PT Barnum; and I'm not one of them!

DanielXX said...

you guys in malaysia very strange la. prime minister can call for stock to relist. stock can delist and relist again to "attract institutional investors into the market". ananda krishnan must know the skeletons in the closet of all the garment ppl.

The Contrarian said...

Dali,
do u think media is a good buy at 1.70 since nstp is going to list at 2.00, and how would u rate pelikans acquisition

Kingsmen said...

its a no brainer....1st create an artificial demand from the public...esp its subscribers...can u imagine how much one would actually make out of the 1k shares ? maybe top end rm 800 ...having gone to all the trouble....most likely these blue forms fellas would end up nothing anyway....perhaps the sharks are just waiting out there on listing day to offload their papers in exchange for cash....

HK said...

totally agreed with you on the last point there mate.

AK is one greedy nut. bought it from the public, sold it at a premium to the saudis and relisting it again..

sigh.

maxis said...

On the contrary, if you buy it on the first day and lucky enuf to get it at RM5+ ringgit, then you stand to gain quite a bit. I hope this signals the start of the good old days of trading - the market is so lacklustre these days and foreign investors have all but desserted us. We need the liquidity, and volume. If you were TAK, wouldn't you do the same thing? Let's be practical, greed is good.

Hilmi said...

Dali,

Superbly written. Your points are so excellently elucidated in impeccable English that your article should be in the Economist.

My loss the other day that I could not attend your talk due to a prior engagement. I look forward to your future talks (& meeting an intellectual like you in person).