Petaling Jaya: AmInvestment Bank Bhd. believes that market consolidation could reignite interest in the telecommunications sector, which has been largely ignored in recent years. Financial Analyst Paul Yap Ee Xing noted that Bloomberg reported on July 16, 2024, that Maxis was exploring a potential acquisition of U Mobile, which could add value through potential synergy and a healthier competitive landscape.
Despite the uncertainty surrounding the acquisition, Paul believes that the negative sentiment weighing down the sector has already been priced in. The sector offers a substantial dividend yield of four percent, supported by the stabilization of existing service revenue and continuous cost-cutting efforts. Paul stated that market consolidation could revitalize interest in the sector, and he believes that a merger between Maxis and U Mobile would be beneficial for both parties. According to him, U Mobile may require a partner to launch its second 5G network, while Maxis could benefit from potential synergies and a more competitive landscape as a form of market consolidation. He compared this to the announcement of the CelcomDigi merger on April 8, 2021, which resulted in a 19 percent and four percent increase in Digi and Maxis share prices, respectively, the day after the announcement. Paul highlighted that potential hurdles include pricing and regulatory approvals. However, if the report is accurate, the proposed figure of US$10 billion (RM44.7 billion) appears fair in his view, translating to an EV/EBITDA 2023 multiple of 9.1 times, which aligns with the industry average. He cautioned that regulatory hurdles might prove more challenging as the Maxis-U Mobile combination would have a 2023 customer market share of 46 percent, considered dominant
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