Maxis-U Mobile Merger Talks Revive Near RM10bil Valuation

Quick Answer: Maxis-U Mobile merger talks have revived, with U Mobile’s owners reportedly now seeking a valuation of around RM10bil, down from RM14bil. HLIB Research says a deal would weigh on Maxis earnings and dividends in the near term, but could improve pricing discipline over the longer term. An agreement remains uncertain, so shareholders should track the next developments.

The Maxis-U Mobile merger is back in focus after Bloomberg reported the owners were reviving plans to combine the two operators. Maxis has asked selected banks and law firms to submit proposals and could appoint advisers shortly.

Why Did the Maxis-U Mobile Merger Valuation Drop to RM10bil?

Maxis-U Mobile merger likely profitability catalyst — Maxis and U Mobile merger talks have revived, with a lower valuation ask on the table.

Earlier talks stalled over price. U Mobile’s owners sought RM14bil, while Maxis offered between RM10bil and RM12bil.

HLIB Research said the lower ask falls within Maxis’ earlier offer range and raises the probability of a deal. It also stressed that an agreement remains uncertain.

What Does the Maxis-U Mobile Merger Mean for Maxis Earnings and Dividends?

HLIB Research expects near-term negatives from 5G capital expenditure, weaker earnings and dividend pressure for both Maxis and CelcomDigi. Investors who track payouts can read more in our Dividend Investing Guide.

A combined entity would have close to 19 million subscribers, based on Maxis’ nearly 10 million in the second quarter of 2026 and U Mobile’s more than nine million in its last publicly reported figures. That puts it broadly on par with CelcomDigi’s 20.3 million subscribers.

Maxis could gain U Mobile’s nationwide 5G network, preserving network differentiation. Overlapping 4G infrastructure could eventually allow site rationalisation and lower network costs.

HLIB Research noted such savings could take several years to materialise. Maxis would also need to exit Digital Nasional Bhd (DNB), leaving CelcomDigi and YTL Corp Bhd to shoulder its cost base.

Can a Two-Player Market Lift Pricing for Maxis and CelcomDigi?

HLIB Research said the prospect of a market repair in a two-player market is strong. U Mobile, the industry’s most aggressive price competitor, is being absorbed.

Thailand offers a precedent. After True and dtac merged in March 2023, average revenue per user (Arpu) rose about 8% to 9% for both Advanced Info Service (AIS) and True over the next two years, roughly 4% annually.

EBITDA margins expanded by about six percentage points at AIS and seven percentage points at True, driven by merger synergies. HLIB Research added that “the non-merging incumbent benefited as much as the merged entity from the market repair.”

What Regulatory Conditions Could Follow a Maxis-U Mobile Deal?

Approval could come with conditions, as seen in the Celcom-Digi merger. That deal required spectrum divestment, the sale of Yoodo and commitments to provide access to mobile virtual network operators.

One analyst told StarBiz that consolidation could improve industry profitability over time. Operators must first absorb higher investment requirements and integration costs.

“Any potential merger will need to balance the benefits of reduced price competition against the risks of regulatory conditions and pressure on shareholder returns,” he said.

What Are HLIB’s Ratings and Targets for Maxis and CelcomDigi?

HLIB Research maintained its overweight rating on the telecommunications sector. It cited operators’ roles in broadband, 5G infrastructure and data centre deployments.

Maxis: buy rating and target price of RM4.45 (HLIB Research)
CelcomDigi: buy rating and target price of RM3.70 (HLIB Research)
Results briefings: Maxis on Nov 6, CelcomDigi on Nov 19

HLIB Research’s ratings are pending further developments and management updates at those briefings. Merger updates from either briefing are worth monitoring.

Disclaimer: This article is for general information only and does not constitute investment advice. Do your own research before making any decision, and consult a licensed adviser where needed.

Key Takeaways

U Mobile’s owners are reportedly seeking around RM10bil, down from RM14bil, which falls within Maxis’ earlier RM10bil-RM12bil offer range.
HLIB Research sees near-term pressure on Maxis and CelcomDigi earnings and dividends from 5G capex.
Thailand’s True-dtac precedent saw ARPU rise about 8% to 9% over two years after the March 2023 merger.
Any approval could bring spectrum divestment, a Yoodo-style sale or MVNO access commitments, as seen in the Celcom-Digi merger.

Frequently Asked Questions

Has the Maxis-U Mobile merger been confirmed?

No. Maxis has asked selected banks and law firms to submit proposals, but HLIB Research says an agreement remains uncertain.

How much is U Mobile valued at in the Maxis merger talks?

U Mobile’s owners are reportedly seeking around RM10bil, down from RM14bil previously. Maxis’ earlier offers ranged from RM10bil to RM12bil.

Will the Maxis-U Mobile merger affect Maxis dividends?

HLIB Research says the merger would weigh on earnings and dividends in the near term for both Maxis and CelcomDigi, due to 5G capex. It expects longer-term pricing discipline to follow.

What is HLIB’s target price for Maxis?

HLIB Research has a target price of RM4.45 for Maxis, with a buy rating pending the Nov 6 results briefing. Its target for CelcomDigi is RM3.70.

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