HLIB Research said policy clarity has been lacking since U Mobile’s appointment.
PETALING JAYA: The current dual wholesale 5G network model risks creating long-term structural issues for the telecommunications sector, says Hong Leong Investment Bank Research (HLIB Research).
In a sectoral report, the research firm said the regulator must step in to align the roles of Digital Nasional Bhd (DNB) – a wholesale-only entity – and U Mobile Sdn Bhd, which was named the second 5G network operator in November 2024.
“In our view, we believe the Malaysian Communications and Multimedia Commission (MCMC) needs to harmonise the differences between DNB (a separate wholesale entity) and U Mobile (a retail mobile operator).
“This is as the current structure will inevitably lead to major disparities in the future, particularly concerning spectrum refarming and spectrum ownership,” it noted.
HLIB Research said policy clarity has been lacking since U Mobile’s appointment and warned that investor concerns are unlikely to be resolved until MCMC provides clear guidance.
“While U Mobile’s upcoming initial public offering or IPO should provide greater insight into its business and network rollout plans, we think more still needs to be done before investors’ concerns over industry uncertainties are fully resolved. Crucially, this has to come from the regulator, MCMC,” it said.
Heading into the second half of 2025, the research firm expects mobile network operators to remain focused on cost optimisation, as revenue growth stays muted in an oversaturated and highly competitive market.
“At the same time, their performance will remain overwhelmingly driven by factors related to the 5G policy, such as the restructuring of DNB and the 41.7%-stake held by the Finance Ministry (with a put option deadline of November 2025); and any potential revision to the 5G wholesale access fee,” it said.
While the market has priced in expectations of a higher 5G wholesale access fee in 2025, HLIB Research noted that “any reduction would constitute a positive catalyst for CelcomDigi Bhd
and Maxis Bhd (and vice versa).”
On the fixed broadband front, HLIB Research highlighted that intense competition is weighing on average revenue per user and net additions, particularly for Telekom Malaysia Bhd (TM) as “the incumbent, but not entirely detrimental in our view”.
However, the research firm said TM‘s wholesale position offered some buffer.
“As the high-speed broadband infrastructure owner, TM will still capture high-speed broadband access wholesale revenues with a lower cost-to-serve than retail, cushioning the impact on margins,” it added.
Against this backdrop, HLIB Research has maintained a “neutral” call on the sector and named TM as its top pick.
“We believe risk-reward still favours the fixed-line operators, given their key role in broadband/5G infrastructure and imminent data centre (DC) deployments in Malaysia, as the build-out phase progressively gets completed,” it said.
Meanwhile, the research house pointed out that TM has experienced a notable increase in its foreign shareholding in 2024, rising from 11%-12% to peak at 16%-17% “as it was seen as one of the key beneficiaries of DCs investment in Malaysia (in terms of providing connectivity)”.
“We expect foreign interest in TM to resurface as new DCs are being gradually commissioned and TM’s own DC (a joint venture with Singtel’s Nxera) becomes operational by mid-2026,” it said.
