PETALING JAYA: Telecommunications giant Maxis Bhd aims to cut its workforce by 10% as part of its “cost optimisation initiative”, said Kenanga Research.
The research house said during Maxis’ recent results briefing for analysts, the group indicated it was targeting to trim its manpower resources by 10% under its newly introduced cost optimisation exercise.
“In particular, 50% of total workforce that were released in Q3 FY2023 comprised of staff at the enterprise segment. Moving forward, over the next two years, lumpy staff compensation will likely recur on an annual basis,” it said in a note today.
According to its latest annual report, Maxis had a total of 4,066 employees as of 2022. Headcount had been on the rise from 3,746 employees in 2020 and 3,862 in 2021.
Kenanga said Maxis plans to adopt increased automation and digitalisation to achieve further cost savings after low hanging fruit cost such as staff right-sizing are harvested.
For its third quarter ended Sept 30 (Q3 FY2023), net profit fell 6.82% to RM287 million from RM308 million in the corresponding quarter a year ago, due to restructuring charges related to cost optimisation initiatives aimed at improving operational efficiency.
Revenue grew by 1.5% to RM2.44 billion from RM2.42 billion a year earlier, driven by its service revenue growth of 1.8% underpinned by steady consumer and enterprise revenue growth.
Kenanga said Maxis’ profit margin compression was mainly attributed to lumpy staff compensation in Q3 FY2023 as the group undertakes a three-year programme to “right-size its workforce”.
Meanwhile, earnings per share (EPS) dropped to 3.7 sen, from 3.9 sen previously, it said in a bourse filing last Friday.
It declared a third interim dividend of 4 sen per share, payable on Dec 21, bringing the total dividend declared year-to-date to 12 sen.
For the nine months ended Sept 30, 2023 (9M FY2023), Maxis posted a net profit of RM937 million, up 1.95% year-on-year compared with 9M FY2022, while revenue expanded by 2.8% to RM7.43 billion from RM7.23 billion.
Kenanga noted that revenue growth was pushed by increased service revenue in the postpaid, enterprise, and fibre segments, aided by the absence of a prosperity tax.
It said the telco’s 9M FY2023 results met its expectations but trailed consensus. “Healthy service revenue growth more than offset drag from staff compensation under its new cost optimisation exercises.
“Sustained traction in Maxis’ convergence and up-selling strategy led to strong subscriber net adds in the postpaid and home connectivity segments,” said Kenanga, which maintained its “outperform” call and target price (TP) of RM5.30.
Meanwhile, MIDF Research said Maxis’ current financial performance is in line with its projections, representing 75.4% of its full-year FY23 earnings estimates.
It highlighted concerns arising in the cost domain, specifically related to depreciation, amortisation, and finance expenses, posing a downward impact on pre-tax profit.
MIDF maintained its “neutral” call with an unchanged TP of RM4.08, expressing ongoing concerns about costs despite consistent revenue growth.
Maxis’ shares ended 5 sen or 1.24% higher at RM4.08, valuing the group at RM32 billion.