March 7, 2011

MAXIS - OSK keeps 'neutral' call on Maxis

Stock Name: MAXIS
Company Name: MAXIS BERHAD
Research House: OSK

OSK Research Sdn Bhd has maintained a "neutral" call on Maxis Bhd with an unchanged target price of RM5.20 as it lacks a share price catalyst with its recent dividend announcement being below expectations.

The assessment is also based on a weighted average cost of capital of nine per cent and terminal growth of 1.5 per cent, OSK said in reference to a report on Maxis being in the final leg of negotiations with Kuwait''s Baraka Telecom (Baraka), on a three-year Mobile Virtual Network Operator (MVNO).

"We see the impact from the potential tie-up as being negligible for Maxis given the niche focus of Baraka, whose target markets are Islamic mobile and data services, OSK said in a research note today.

Maxis' share price was down six sen to RM5.47 as at 12.30 pm.
Baraka, a unit of Reach Telecom Holding KSCC of Kuwait, plans to provide shariah-compliant telecommunications services in Malaysia.

OSK said the parties behind Baraka want to consider more options, including a revisit of its business model, in light of the extremely competitive mobile landscape in Malaysia and the challenges faced by MVNOs.

The decision to go along with Maxis is likely to have been encouraged by the close ties between the shareholders of Baraka and Saudi Telecom, a major shareholder of Maxis, OSK said. -- Bernama

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