Ex-DiGi CEO not joining Maxis

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KUALA LUMPUR: In a surprise announcement yesterday evening, Maxis Bhd said it needs to find a new CEO as its CEO-in-waiting, Johan Dennelind, will not be joining the company in a month’s time.

Dennelind’s appointment was announced on Dec 21 last year. He was to take over the post from Sandip Das.

Dennelind, the former CEO of smaller rival DiGi.Com Bhd, will not be taking up the appointment at Maxis come July 1, “owing to recent personal family circumstances which have made it necessary for him to reside closer to his family in Sweden”, Maxis said in its statement.

Maxis said its board had agreed it was in the company’s best interests to release Dennelind from his contract.

“The board will continue with its search for a CEO,” it said, adding that the ideal candidate should further strengthen its management team on top of mentoring and grooming a suitable successor.

Investors may react negatively to yesterday’s news given market expectations of strategic changes taking place at Maxis once the former DiGi CEO had come on board, analysts say.

“There were a lot of expectations [on new CEO bringing about changes], so there might be a small knee-jerk negative reaction. But they are going from no CEO to no CEO. It’s just that they would need to start the whole process for a new CEO from scratch again and that takes time,” CIMB Research analyst Kelvin Goh told The Edge Financial Daily.

Dennelind said ‘recent personal circumstances’ made it necessary for him to reside closer to his family in Sweden

“The management committee will have to continue running the show a while longer. I don’t expect any major strategic change near term as a CEO is needed to steer strategic changes,” Goh added.

Nonetheless, analysts reckon any share price weakness will be limited as there is support from its steady dividend payouts.

Maxis added 4 sen to close at RM6.87 yesterday, implying a 5.8% yield over a forecast dividend of 40 sen per share for FY13.

Maxis has paid dividends every quarter but analysts have in recent years raised questions about the sustainability of Maxis’ dividend payments as the company has been paying dividends in excess of its profits using debt.

Consensus is already lukewarm on Maxis, with only eight “buy” calls versus 16 “hold” and 11 “sell” recommendations. Target prices range between DBS Research’s RM5.45 and TA Research’s RM8.16, according to Bloomberg data.

Even before yesterday’s announcement, some market watchers had raised questions over just how much of a free hand Dennelind would have had — to implement changes at Maxis, which is controlled by billionaire Ananda Krishnan.

“I’d imagine be pressure from backseat drivers,” one market watcher said.

Pending the selection of a new CEO, Maxis will continue to be steered by two joint COO’s, who report to Maxis’ chairman Raja Arshad Raja Tun Uda.

Maxis CFO Nasution Mohammed was yesterday named joint COO effective June 1, joining Suren J Amarasekera, who continues to be joint COO. Nasution takes over from Mark Dioguardi, who will be relinquishing the position this Friday. Nasution continues to oversee finance.

This article first appeared in The Edge Financial Daily, on May 30, 2013.

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