Malaysia sticks to its guns despite telco demands as 5G deadline looms

Tengku Datuk Seri Zafrul Abdul Aziz

KUALA LUMPUR (The Straits Times/ANN): Malaysia is playing hardball to finalise ownership of its 5G infrastructure vehicle within a fortnight, as it seeks to narrow the gap with regional competitors who have already deployed the super-fast next-generation mobile network.

Ahead of a June 30 deadline, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz told The Straits Times that foreign investors have expressed interest in taking up a stake in state-owned Digital Nasional Bhd (DNB).

Celcom, DiGi, Maxis and U Mobile, collectively known as CDMU, have close to 90% market share, and have insisted on holding a controlling 51% stake in DNB, as well as pushing the deadline beyond this month.

The results of ongoing negotiations will have a huge impact on the future of mobile connectivity in the country, with Communications and Multimedia Minister Tan Sri Annuar Musa threatening on Tuesday to open the door to other players if the telcos resist what some of them claim are unfair terms to sign up to what will be Malaysia's only 5G wholesale provider.

In an exclusive interview, Tengku Zafrul said that an extension of the deadline to "early July, but no later than that" is possible if it is required to tie up loose ends.

But a term sheet laying out "the main terms of governance, and the equity issues" will be ready in June.

This is in line with "our primary goal of providing 5G services to as many users and businesses as possible in the shortest amount of time, allowing Malaysia to catch up with its regional peers", the minister said.

"If telcos, particularly the larger ones, continue to delay providing 5G services to their customers... his (Annuar's) ministry will consider other options, such as issuing new licences to new players to enable the speedy delivery of 5G services in the country. Indeed, the interests of Malaysia and its people must take precedence over the telcos' narrow commercial interests," he said.

Tengku Zafrul stressed that "5G will boost the economy by RM650bil and create 750,000 high-value jobs" by 2030, making its swift deployment "a matter of public interest".

However, he also offered an olive branch to the MNOs, in the form of "fiscal incentives to assist telcos' transition to 5G, to mitigate any short-term commercial consequences" before they "reap the benefits of 5G without the need for additional government assistance" in the longer-term.

Industry insiders acknowledge that telcos which have invested heavily into 4G infrastructure would have to write down huge depreciations on those assets if the market quickly moves towards 5G services.

The mobile network is already widely available in Singapore, Thailand and the Philippines, with Indonesia and Vietnam ahead of Malaysia in rolling out their networks.

Kuala Lumpur had set up DNB to build a single wholesale network (SWN) over a year ago, but faced both political and commercial pushback towards the end of 2021.

Only two mobile operators - state-controlled Telekom Malaysia and conglomerate YTL's YES - have so far supported the SWN model and signed up to trials and equity stakes in DNB. Nine telcos are being offered equal 7.78% shares in DNB, leaving the finance ministry with a minority 30% holding.

But some telcos, especially CDMU, want a dual wholesale network (DWN) model to better optimise availability and pricing of 5G. They claim that DNB's offer of RM30,000 monthly for each gigabit per second (Gbps) of capacity, with a discount rate of RM22,000 beyond the first 1,200 Gbps, is expensive. This is especially when agreements are locked in for 10 years as the cost of mobile data has shrunk by 30 times since 4G was launched in 2013.

The government has insisted the cost per gigabyte of data will come up to just 20 sen, less than half of that currently being incurred by MNOs. - The Straits Times/ANN

Follow us on our official WhatsApp channel for breaking news alerts and key updates!

DNB , Digital Nasional , 5G , SWN , Zafrul Abdul Aziz


Next In Business News

Wall St set to open lower as Meta Platforms, economic data weigh
Al-’Aqar REIT aims to acquire yield-accretive properties from KPJ Healthcare
Samenta wants micro enterprises to be exempted from e-invoicing
Pantech seeks Main Market listing for subsidiaries via SPV
Inta Bina secures RM224.80mil contract for serviced apartment project
UMediC transfers to Main Market
Ringgit closes marginally higher against US dollar
AirAsia X mulls flying to Eastern Europe, London and Orlando
MKHOP posts RM16mil net profit in 2Q24
Gobind: Appointment of new DNB board members marks major milestone in 5G network restructuring

Others Also Read