QUOTE(Oracles99 @ Feb 1 2016, 10:40 PM)
What those analyst said.
1) Maxis n Axiata's gearing implies that they have problems funding the spectrum auction
- If u look at maxis record after its relisting, it has on one occasion issued a private placement of new shares to some unidentified parties collecting proceeds of RM2.3 billion. (This is the cost likely to be paid if we follow Thailand's auctioning process). Incidentally, AK himself is flush with cash after selling his power assets to 1MDB for RM8.5 billion.
So funding is not a problem for both Maxis n Axiata.
2) Maxis n Axiata would lose some of their 900MHz spectrum n are considered losers.
- The government has said they would like to see an equitable allocation of spectrum to make the playing field more level. I think this is not too bad after all. Everyone has some share.
3) Telcos would have their ability to pay dividends capped.
- The golden days of generous dividends have probably passed as our market has already matured. But I believe they are able to pay a decent dividend. The cost of spectrum would partially be passed to consumers.
- The days of irrational pricing of their products by some aspiring telcos would end i.e. the price war would end.
So, it is not the end of the world for telcos.
1. The listed entity of Maxis in the KLSE has nothing to do with AK's personal own cash.
Even AK wish to inject cash into the company, a private placement will dilute the EPS.
3. Generous and high dividend payout (near 100% of its EPS) may not sustainable as previous, if extra capex needed for bidding the specturm. This is reason why Maxis is beaten hard than other, because its high dividend payout is the main attractiveness of the share price.
Price war is more about saturated market that has little room for further rise in subscribers. So whether price war will diminish or not has no direct relationship with the spectrum bidding issues.
But for sure, it is not the end of the world.
In fact, it may be bargain buy for trading at Rm5.xx