PETALING JAYA: The winning bid by Ericsson Malaysia for the 5G network rollout at RM11bil was RM700mil cheaper than the next lowest bid, said Digital Nasional Bhd (DNB) in a statement yesterday.
In addressing concerns raised over the selection and award process, DNB said the tender selection process – which had begun in March this year – was “rigorous and competitive’’ and that was why it awarded the RM11bil contract to Ericsson to design and build the nation’s 5G network.
It said the tender for the 5G network began with an initial evaluation of 14 potential bidders, then it shortlisted eight.
Only four of the eight submitted their bids. The eight, according to sources, were said to be Ericsson, Huawei, ZTE, Samsung, Cisco, Nokia, NEC and FibreHome.
In the statement, DNB said it has began engaging industry participants, including mobile network operators (MNOs), and tower and fibre owners.
“The design, build and maintenance of the nation’s 5G network managed by Ericsson is estimated to cost RM11bil, around RM700mil lower than the total cost of ownership of the next closest bid, ’’ DNB said in the statement.
It added that “Ericsson’s network equipment, deployment services and ongoing maintenance and network management cost of RM4bil was the lowest”.
The remaining RM7bil will cover network infrastructure costs from other parties comprising primarily tower rental and fibre leasing over a 10-year period, DNB said.
DNB said the tender process was structured by Ernst & Young (EY) Consulting Sdn Bhd according to global standards and involved four panels, comprising some 50 local and international experts from across 10 countries with current 5G network rollout experience.
“The tender evaluation team comprised internal and external independent industry experts and experienced professionals.
“The tender results were then deliberated extensively by the Board Tender Committee and the board of DNB.
“The strictest standards of governance were adopted throughout the tender process as advised and facilitated by EY Consulting, ” said DNB.
“The tender requirements were based on the criteria identified and refined through a rigorous process with industry feedback on the requirements of the 5G network and shared with all invited network equipment providers.”
It outlined the criteria used for evaluation that included proven credentials in successful 5G deployment and execution of end-to-end technology solutions, availability of enhanced security to safeguard users and platforms, having a presence and ecosystem in Malaysian, use of locally-based resources for immediate deployment and an effective plan for knowledge transfer.
DNB said its statement on the process of the 5G tender and the award to Ericsson was in response to queries and misinformed narratives on social media.
The award of the contract drew flak from within the industry, raising questions over fairness and monopoly.
“Is it wise to award one vendor the whole of the current RM11bil 5G project?’’ asked an industry executive.
Another said “if the procurement strategy has been carefully thought of in line with good national telecoms industry development strategies, there could always be in-built conditions in the tendering for compelling cases for more than one vendor to be awarded, perhaps, two vendors”.
“All telecom equipment and networks are developed for inter-working, for forward and backward compatibility, according to international technical standards under the United Nations agency, International Telecommunications Union.
“For the good of the country, two to three vendors would be good as it involves RM11bil, ’’ said an industry expert.
DNB had earlier said that more than 60% of the spend on the network infrastructure would directly benefit bumiputra interest in the telecommunications industry and bumiputra contractors.
“For sure the radio equipment would be from overseas. The building of the new infrastructure would be by locals. It (DNB) will re-use many of the existing infrastructure with perhaps some incremental new sites.
“Unless it (DNB) also included the operational expenditure (opex) part of maintaining the infrastructure and network, typically the ratio of opex to capital expenditure can be about 30%-35%. It is best to ask DNB how it arrived at the 60% equation. It should share more information and be more transparent, ” said an industry expert.