By LEONG HUNG YEE
hungyee@thestar.com.my
FIFA World Cup likely to boost earnings in the third quarter
PETALING JAYA: Amid intense competition in the local telecommunications industry, telcos' upcoming first-quarter results are likely to be within analysts' expectations.
Analysts said Axiata Group Bhd may report better net profit in the first quarter of 2010, helped by its subsidiaries in Indonesia and Celcom Axiata Bhd, while Maxis Bhd's performance would be mostly within expectations.
So far, only DiGi.Com Bhd has reported its results. DiGi achieved a net profit of RM278.2mil, or 35.80 sen per share, on revenue of RM1.29bil for the first quarter ended March 31.
Axiata and Telekom Malaysia Bhd (TM) are due to release their financial results for the three months ended March 31 on Thursday. Maxis is expected to announce its results on May 31.
An analyst said DiGi's results indicated that despite the stiff competition, profit margin was still healthy although it was being squeeze.
“We believe the telcos enjoyed higher profits in the first quarter of 2010, thanks to festivities and wireless broadband on the back of an improving economy.
“We do not expect nasty surprises and also do not rule out a better-than-expected results from Axiata,” the analyst said.
RHB Research Institute said in a report Axiata was likely to report a strong first-quarter performance.
“We believe Axiata's first quarter to March 31 result is likely to come in stronger on a year-on-year basis, underpinned by stronger-than-expected first-quarter performances at XL Axiata and Dialog; rupiah that has strengthened against ringgit and its low base effect.”
The brokerage expects Axiata's first-quarter earnings before interest, tax, depreciation and amortisation (ebitda) margin to improve marginally year-on-year, underpinned by a higher ebitda margin at XL Axiata that is likely to be partly offset by lower ebitda margin at Celcom.
Another analyst, who said Axiata was a regional growth story, expects telcos' results to come largely within market expectations.
He said the telcos were in stiff competition for new customers as the market was approaching maturity and expects net subscriber addition to be marginal.
The analyst was less optimistic on TM in light of surging competition in broadband market, erosion of fixed-line revenue and uncertainty over the take up of high-speed broadband.
However, he said the newly launched UniFi service would see some net subscriber addition for TM.
The analyst said the FIFA World Cup was expected to boost telcos' earnings in the third quarter due to potential rise in call minutes, SMS traffic and demand for data services during the football season.
On Maxis, analysts generally believe the telco's first-quarter results will be within expectations.
They expect Maxis to maintain its ebitda margins due to ongoing cost-control measures. However, they said the risk for Maxis would be a weaker-than-expected net subscriber addition.
According to Bloomberg analysts consensus, Axiata's and Maxis' estimated net profit for the current financial year ending Dec 31 may rise to RM1.9bil and RM2.4bil respectively. TM is expected to report RM535mil for the full year.
http://biz.thestar.com.my/news/story.asp?file=/2010/5/26/business/6336601&sec=business
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