U Mobile sees FY25 losses widen as 5G costs bite, gains ground in services

KUALA LUMPUR: U Mobile, Malaysia's second 5G network provider, saw its core net loss widen in financial year 2025, as higher network costs and accelerated depreciation linked to its broadband rollout weighed on earnings.

The company's headline net loss widened 124 per cent year-on-year (YoY) to RM1.62 billion, accoridng to CIMB Securities. this was partly due to accelerated depreciation of RM1.03 billion, up from RM489 million in FY24.

U Mobile's core net loss (CNL) widened 163 per cent Y0Y to RM595 million, said CIMB Securities.

Excluding interest costs from shareholders' advances (SHA) and redeemable convertible preference shares (RCPS), U Mobile's CNL stood at RM383 million, compared with RM19 million a year earlier.

U Mobile's earnings before interest, tax, depreciation and amortisation (Ebitda) fell 38 per cent YoY to RM773 million.

Its Ebitda margin fell 15.2 percentage points to 22.2 per cent. This was likely due to higher network and device costs, alongside possible one-off "kitchen-sinking" charges.

Normalised depreciation and amortisation, meanwhile, fell 10 per cent YoY to RM935 million, reflecting a lower fixed-asset base following RM1.5 billion in cumulative accelerated depreciation in FY2024 and FY2025.

Net interest costs rose two per cent YoY to RM432 million.

Despite the higher costs, U Mobile continued to gain ground in mobile services.

Mobile service revenue grew five per cent YoY in FY25, outperforming CelcomDigi Bhd's one per cent decline and Maxis Bhd's flat growth.

As a result, U Mobile's mobile revenue market share increased 0.8 percentage point to 17.4 per cent. This continues a largely uninterrupted rise from just 2.1 per cent in FY12.

The stronger topline may have been supported by U Mobile's expansion in Sabah and Sarawak, where it has invested in distribution and network coverage.

Sales of goods also grew 41 per cent YoY, following a 38 per cent increase in FY24, suggesting stronger traction for device-bundled postpaid and 5G broadband plans.

U Mobile's capitalised capital expenditure, excluding spectrum, surged more than sixfold to RM1.23 billion in FY2025, driven by its 5G network rollout from mid-2025.

The spending was funded through higher term loans, which rose RM338 million YoY vendor financing, up RM493 million and short-term trade credits.

CIMB Securities said excluding SHA and RCPS, U Mobile's net debt increased 25 per cent YoY to RM3.38 billion at end-FY25.

With Ebitda falling, net debt-to-Ebitda doubled to 4.4 times, compared with 2.3 times for CelcomDigi and 1.9 times for Maxis.

Free cash flow to equity also swung to a negative RM251 million from a positive RM123 million previously, after accounting for RM819 million in cash-flow capex and RM103 million in net repayment of vendor financing.

CIMB Securities said U Mobile's shareholder structure also changed significantly during the year.

On March 17, Mawar Setia Sdn Bhd became its largest shareholder with a 50.2 per cent stake following completion of a share purchase agreement with Singapore Technologies Telemedia.