Maxis shares up in early trading on renewed potential U Mobile merger plans
KUALA LUMPUR: Maxis Bhd shares rose in early trade following reports of renewed plans for a potential merger with U Mobile Sdn Bhd.
Maxis shares experienced an early trading boost on Friday following reports of a potential merger with U Mobile Sdn Bhd. The telecommunications company's stock rose five sen to RM3.56 in the first trading session, with a total of 268,300 shares changing hands. Hong Leong Investment Bank Bhd expressed its positive outlook on the proposed merger in a recent research note.
The bank believes the merger would help stabilize the market by eliminating a fierce price competitor and consolidating the market into a two-player scenario. However, the bank also warned of potential negative short-term effects, citing increased capital expenditure for 5G technology, weaker earnings, and dividend pressures for both Maxis and CelcomDigi Bhd.
Despite these concerns, Hong Leong Investment Bank Bhd maintained an overweight rating on the overall telecommunications sector. The news comes after Maxis and U Mobile revived merger talks, with the deal aimed at creating Malaysia's largest wireless operator by market value.
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