Maxis Communications Bhd

Company Profile

Publication Date: 27 Jun 2008

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TABLE OF CONTENTS

TABLE OF CONTENTS

Company Overview..............................................................................................4
Key Facts...............................................................................................................4
SWOT Analysis.....................................................................................................5

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Maxis Communications Bhd
Company Overview

COMPANY OVERVIEW

Maxis Communications, a subsidiary of Binariang GSM (now know as MEASAT Satellite System
(MSS), is one of the leading telecommunications companies engaged in mobile telecommunications.
The company provides mobile, fixed line telephony, data and network services.The company primarily
operates in Malaysia. It is headquartered in Kuala Lumpur, Malaysia.

The company is a subsidiary of a privately held Binariang GSM company. Therefore, it is not obliged
to provide any financial data.

KEY FACTS

Head Office Maxis Communications Bhd

Aras 18 Menara Maxis
Kuala Lumpur City Centre
Off Jalan Ampang
50088 Kuala Lumpur
MYS
Phone 60 3 2330 7000
Fax 60 3 2330 0008
Web Address http://www.maxis.com.my
Financial Year End December

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SWOT Analysis

SWOT ANALYSIS

Maxis Communications (Maxis) is an investment holding company. The company is one of the
leading telecommunications service providers in Malaysia. The company offers services in the area
of mobile communications, fixed line, international gateway and broadband internet services. The
company is a strong regional player which created competitive advantage over other players. However
the introduction of number portability in Malaysia could have an adverse impact in eroding the
company’s customer base.

Strengths Weaknesses

Strong regional player Over dependence on Malaysia

Affiliation with MEASAT Satellite System

Opportunities Threats

Alliance with Microsoft Regulatory framework

Growing broadband market in Malaysia Mobile number portability in Malaysia
Accelerating wireless market in Asia Pacific Intense competition

Strengths

Strong regional player

The company is a strong player in Malaysia. The company is one of the leading telecommunications
service providers in Malaysia. The company offers services in the area of mobile communications,
fixed line, international gateway and broadband internet services. The company has presence in
India, Indonesia and Malaysia. In April 2008, Maxis announced that their active 3G user base had
reached 1.3 million in March 2008, compared to approximately 350,000 in March 2007. The more
than three-fold (270%) year-on-year growth underlines the growing demand for the company’s data
services. The 1.3 million active 3G base of the company is almost 46% of the larger base of 2.8
million subscribers actively using Maxis' mobile data services over GPRS, EDGE and 3G.

The company also provides broadband VSAT services, which ranked as the No 1 retail broadband
VSAT for petrol stations in FY2006, with more than 800 sites nationwide. The company has
consistently ranked among the top 10 public companies in Malaysia. The company has won several
domestic and international awards. In 2007, Maxis was awarded for excellence in telecommunications
sector in mobile telecommunications as part of the ‘Technology Asean business review awards
2007’.This strong market position in Malaysia has provided the company with a competitive advantage
over others.

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SWOT Analysis

Affiliation with MEASAT Satellite System

Maxis is a wholly owned subsidiary of MEASAT Global. MEASAT Global operates in India and the
Philippines. It provides satellite communication services to Asia’s broadcasters, direct-to-home pay
television platforms and telecommunications operators. MSS has operating satellites across 3 orbital
slots. The MSS fleet provides satellite capacity to over 145 countries across Asia Pacific, Middle
East, Africa, Europe and Australia. In 2008, MSS expanded its fleet with the launch of MEASAT-3a
satellite.

Maxis is a telecom service provider and therefore the company’s affiliation with MSS makes it a
vertically integrated company. Also, MSS provides a range of broadcast and telecommunications
services which include high definition and standard definition video playout, video turnaround,
collocation, uplinking and IP termination services.Therefore, Maxis can leverage the MSS’s subscriber
base to strengthen its market position in the Malaysia and internationally, specifically, in India and
Indonesia.

Weaknesses

Over dependence on Malaysia

Maxis Communications is geographically concentrated more in the Malaysia. For the fiscal year
2006, Malaysia, the company's largest geographic market, accounted for 84.4% of the total revenues.
In addition, the IMF has projected the Malaysian country’s real GDP growth as percentage is expected
to decline from 6.3% in 2007 to 5% in 2008. The inflation is expected to move from 2.1 in 2007 to
2.4 in 2008. The country’s current account balance as a percentage of GDP is expected to decline
from 14% in 2007 to 11.7% in 2008. As a result, the company’s total revenues are heavily exposed
to the risks of a downturn in the Malaysian market. Additionally, some of the company's competitors
have larger and more diversified international revenue streams, putting the company at a competitive
disadvantage.

Opportunities

Alliance with Microsoft

The company has entered into a partnership with Microsoft in 2008. Under the partnership, both will
develop and deliver integrated solutions that address communications requirements in the enterprise
sector. These solutions include integrated internet-mobile services for enterprises of all sizes. This
partnership will enable both companies to increase their market position in the telecom business
solutions market.

In alignment with the partnership, the companies launched two solutions, Maxis Mail and Maxis
Push Email to expand into the business email market. Maxis Mail is a subscription-based email

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SWOT Analysis

service that delivers desktop email using Microsoft's exchange solution on office PC for SME's. With
this solution in the Malaysian enterprise market, Maxis Mail eliminates the need for companies to
purchase an enterprise server, integrate software and provision all their employees' workstations
and wireless devices for email. Through Maxis Mail, Maxis expects to improve enterprise email
capability and mobility for small and medium-sized businesses, which make up about 520,000
accounts in Malaysia. In December 2007, less than 10% of SME's had access to full-feature
server-based business email services.

Maxis Push Email allows business employees to send, receive email and schedule their appointments
based on Microsoft Exchange Solution using their Windows Mobile-based device. Maxis Push Email
is offered to Maxis' SME's as well as to corporate customers with their own enterprise server. This
partnership will enable Maxis to expand its suite of services gaining incremental income..

Growing broadband market in Malaysia

The broadband adoption in Malaysia has witnessed a sharp growth in recent years. For example,
according to the research reports, the total number of residential DSL connections and revenues in
2007 was 0.9 million and $314 million, respectively, which is expected to reach a value of 2 million
and $776 million, respectively, in 2011. The penetration rate of broadband is expected to reach a
value of 9% in 2011 from 4% in 2007. Being one of the leading players in this segment, Maxis
Communications is likely to benefit the most from this opportunity.

Accelerating wireless market in Asia Pacific

The telecom industry has witnessed growth of mobile phones. The total number of mobile subscribers
worldwide at the end of 2007 stood at 3.1 billion. This figure is expected to increase to approximately
4.4 billion by the end of 2011. This growth is mainly driven by the booming Asia Pacific mobile market.
By 2011, the Asia Pacific region would account for approximately 40% of the world's entire mobile
subscriber base, with more than 1.3 billion subscribers accounted by China and India alone. The
company has a manufacturing facility in Goa in India and thus is strategically positioned to serve
customers in the booming Asia Pacific mobile market. Growing Asia Pacific wireless market will
boost demand for the products of Maxis.

Threats

Regulatory framework

The company is exposed to the risk of government policies and regulation issues. As a business
entity operating in a highly-regulated market, Maxis continues to be exposed to a multitude of business
risks either originating from internal sources or the external environment. Being in a highly-regulated
industry, government decisions and actions on communication and multimedia policy or regulatory
issues may have a negative impact on the business of Maxis. For instance, the withdrawal of the

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SWOT Analysis

2.5 GHz and 3.5 GHz spectrum as announced by the Ministry of Energy, Water and Communications
of Malaysia on 19 November 2007 poses a threat to Maxis.

In addition, Malaysian Communications and Multimedia Commission (MCMC) is the regulator for
the converging communications and multimedia industry and its role is to implement and promote
the Government's national policy objectives for the communications and multimedia sector. The
MCMC is also charged with overseeing the new regulatory framework for the converging industries
of telecommunications, broadcasting and on-line activities. In 2001, the MCMC also took over
regulation of the postal industry and was appointed the certifying agency for implementing digital
signature legislation. Changes in government regulation and policy issues will increases the company’s
compliance cost which affects the company’s operating margins.

Mobile number portability in Malaysia

Mobile number portability (MPN) enables the customer to change the network provider retaining
their mobile numbers. In 2005, Malaysian government announced its intent to provide number
portability and introduced it in June 2007. MPN may cause loss of branding and increases the
complexity of back office operations to the service providers.

The introduction of number portability is expected to increase churn rates and customer acquisition
costs. Hence, the introduction of number portability in Malaysia could have an adverse impact in
eroding the company’s customer base.

Intense competition

The competition in the Malaysian telecom market has intensified in recent years. This has been
primarily driven by the increasing mobile phone penetration rate. As a result, the focus is on increasing
market share as well as offering high value services to increase ARPU. The wireless
telecommunications industry in Malaysia is experiencing technological changes with the introduction
of new technologies like 3G. This has also led telecom operators to compete on the basis of latest
technology.

This increased competition from existing and new operators has resulted in greater price competition
in the mobile market, with operators lowering monthly access fees and tariffs, providing substantial
handset subsidies, and offering more attractive product and service packages. For instance in
Malaysia, the company has close competition with Telecom Malaysia and in other key competetiors
for the company includes Bharti Airtel, Celcom, DiGi.com, Vodafone Group, and Hutchison Whampoa.
This increase in competition has resulted in a higher churn rate and declining cellular customer base
to the company.

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