PETALING JAYA: The government should rethink its 5G deployment strategy and look into liberalising the network to allow mobile operators to refarm their existing spectrum for 5G bandwidth.
Besides that, Putrajaya should make quality of services and increase coverage for populated areas a priority instead of mandating price cuts.
These were the two suggestions made by the former chairman of Malaysian Communications and Multimedia Commission (MCMC) Al-Ishsal Ishak at the Macquarie Capital Securities (M) Sdn Bhd corporate access event.
Ishsal said demand-led 5G deployment will lower execution risks, which will be positive for the sector, spurring capital expenditure (capex) investment by players.
While there is minimal visibility into the contracts signed by Digital Nasional Bhd (DNB), any revision without negative effect on the nation’s finances is tricky.
The government could liberalise 5G by allowing mobile network operators to refarm their existing spectrums for 5G, allowing healthy competition (similar to Japan), noted Macquarie Research in its report.
Ishsal believes dynamic spectrum sharing – allowing spectrums to be used for 4G or 5G – will be optimal.
Macquarie believes Celcom Digi will have an added advantage, given its spectrum scale, if this happens.
Notwithstanding that, Ishsal believes DNB’s spectrums, which were awarded based on apparatus assignment with yearly fees, further provide the government with some flexibility to rethink its 5G deployment strategy.
He pointed out that the Statistics Department’s consumer price index data points to declining prices for telecommunication-related services, unlike other categories.
He believes instead of mandating price cuts, the government’s role should be anchored to increasing the quality of services and increasing coverage for populated areas.
Corroborating this, industry feedback suggests the last few percent of 4G coverage has been challenging, which has been facilitated by MCMC’s universal service provision funds.
The research house concurred with Ishsal’s view that the Jendela target to increase premises with fibre optic to nine million by 2025 (7.44 million as at third-quarter 2022) requires significant capex by the sector, adding that balancing few levers such as price and capex rollout will be key to increasing penetration.
Against this backdrop, the house reiterated its view that the upcoming home broadband campaign will mostly be targeted at certain segments – B40 and M40.
Nevertheless, in a worst-case scenario it has factored in additional RM10 or 8% cut in average revenue per user.
On whether Malaysia needs 100% 5G coverage, Macquarie believes this will be negative for the sector, given that the limited business case, especially on the consumer side for 5G, more so in rural areas, presenting downside risks to the sector’s earnings.
The research house’s order of preference in the sector remains with Telekom Malaysia Bhd, followed by TIME Dotcom Bhd, Celcom Digi, Maxis Bhd and Axiata Group Bhd.
It said clarity on 5G by next month should provide a re-rating catalyst for the sector if the government decides to liberalise the 5G rollout, reducing execution risks and saving costs.