Financial Analysis of Axiata and Maxis Communication

Running head: FINANCIAL ANALYSIS
Financial analysis
Name of the Student
Name of the University
Author Note

FINANCIAL ANALYSIS
Table of Contents
Table of figures:.........................................................................................................................2
Introduction:...............................................................................................................................3
Discussion:.................................................................................................................................4
Comparing and analyzing the financial performance of Axiata and Maxis Communication:...4
Identification of strategic and operational issues of companies:.............................................15
Recommendation:....................................................................................................................17
Conclusion:..............................................................................................................................18
Bibliography and References list:............................................................................................19

FINANCIAL ANALYSIS
Table of figures:
Figure 1: Net profit margin........................................................................................................6
Figure 2: Return on total assets..................................................................................................7
Figure 3: Return on equity.........................................................................................................8
Figure 4: Current ratio................................................................................................................9
Figure 5: Quick ratio................................................................................................................10
Figure 6: Cash ratio..................................................................................................................10
Figure 7: Debt to equity ratio...................................................................................................11
Figure 8: Equity ratio...............................................................................................................12
Figure 9: Debt ratio..................................................................................................................13
Figure 10: Days sales outstanding............................................................................................14
Figure 11: Total assets turnover...............................................................................................14
Figure 12: Fixed asset turnover................................................................................................15

FINANCIAL ANALYSIS
Introduction:
The report is prepared to evaluate the financial performance of companies listed on
Bursa Malaysia. For this purpose, two companies have been chosen from telecommunication
sector and these two companies include Axiata which is the main company and Maxis
communication being the competitor. Axiata is the leading telecommunication group
operating in Asia that has investment in network infrastructure, mobile network operations
and digital internet companies that serves approximately 350 million subscribers in eleven
countries across the region (Axiata.com 2018). It has placed itself as leader in the
telecommunication market of Malaysia. In terms of revenue, Axiata is the biggest mobile
operator and has the plan of making its tower unit of the five biggest worlds by year 2020.
This telecom company combines together the best in the region in terms of connection,
innovating and talent. A range of innovative telecommunications services is provided by
organization and products along with having a diverse portfolio in communication
infrastructure, mobile network and digital services. There are six mobile operators in which
Axiata has controlling operators under the brand names XL in Asia, Celcom in Malaysia,
Robl in Bangladesh, Dialog in Sri Lanka, Ncell in Nepal and smart in Combodia and have
strategic interest in M1 in Singapore and Idea in India (Axiata.com 2018). Axiata Digital was
established by company in year 2012 for capturing rapid growth in internet business. A
portfolio of twenty nine digital brands including seven joint ventures and three subsidiaries
are built by Axiata digital that helps in servicing growing demand in mobile advertising,
mobile money, entertainment, e commerce and education.
Maxis communication is obsessed with providing constantly expanding universe of
digital applications with the best access. Organization continuously evolves to provide
customers with unrivalled suite of end to end communications and innovative experience

FINANCIAL ANALYSIS
from just being a leading company. Enterprise customers are providing fixed connections,
mobility solutions and enables business to engage their customers in a meaningful ways using
a digital platform. It is ensured by organization that superior customer experiences are
enjoyed by customers. Maxis are the largest telecommunication provider operating in
Malaysia. There is long term commitment on part of organization for expanding the coverage
of 4G LTE so that internet service enjoyed by customers is uncompromised (Maxis 2018).
Maxis Telecommunication Company intends to provide better quality service with
larger coverage and compared to competitors, the price they charge for the service are
extremely high. Despite the high price for their service, the share of market enjoyed by Maxis
Berhad is huge. This is indicative of the fact about how well competitive competence is
possessed by the organization. Maxis will continue to enhance their position as differentiated
value propositions to the customers along with leveraging quality and coverage of network.
The impact of progressive termination of arrangement of network sharing is accounted for in
year (Maxis, 2018). It is expected that the service revenue will decline along with decline in
earnings before interest, tax, depreciation and amortization.
Discussion:
Comparing and analyzing the financial performance of Axiata and Maxis
Communication:
The financial performance of Maxis communication and Axiata has been compared
over the past five years by the application of ratio analysis tool. Ratio helps in analyzing the
financial data of reporting entity that assist in financial and investment decision making
(Adam 2017). Performances of companies have been evaluated in terms of issues pertaining
to efficiency of operations, potential investments; credit policies and borrowers credit

FINANCIAL ANALYSIS
worthiness. Evaluation of company’s financial performance using ratio analysis has been
done in terms of efficiency, liquidity, solvency and profitability position.
The profitability positions of companies have been evaluated by the computation of
net profit margin, return on total assets and return on equity. This ratio helps in measuring the
efficiency of firms in generating profits.
Net operating profit generated by company is measured by dividing net profit of
company by total amount of revenue generated. For Maxis communication, the net profit
margin has increased from 19.51% in year 2013 to 20.31% in year 2015 and further to
25.20% in year 2017. It is indicative of the fact that net profit margin has increased year on
year implying that company has become efficient in converting sales into actual profit.
When looking at the figures of Axiata, it can be seen that ratio has reduced by a
considerable percentage from 19.23% in year 2013 to 16.75% in year 2015 and further 5.28%
in year 2016 respectively. However, ratio increased by fewer percentage in year 2017 to
7.93%. This drastic fall in ratio value is indicative of the fact that company has not been
efficient in converting their sales into actual profit (Gaonkar et al. 2018). Lower profit margin
depicts that efficiency of organization in converting sales has reduced. Therefore when
comparing the net profit margin of both the companies, it can be seen that Maxis
communication is more efficient in converting their sales.