Dual networks: Boost or burden?

MALAYSIA’S decision to move from a single wholesale 5G network to a dual-network model marked one of the country’s biggest telecommunications policy reversals.

Supporters argued that appointing U Mobile Sdn Bhd as the country’s second 5G network provider would inject competition, spur innovation and reduce reliance on a single infrastructure owner.

Critics, however, questioned whether a market of 34 million people could economically sustain two nationwide 5G networks.

Nearly two years later, the question is whether two nationwide networks can remain commercially viable while delivering long-term value to consumers and investors.

The issue has come into sharper focus as U Mobile, the operator tasked with building the second network, continues to face a challenging financial position.

According to its latest filings with the Companies Commission of Malaysia, U Mobile posted a RM1.6bil net loss in the financial year ended Dec 31, 2025, while accumulated losses have ballooned to approximately RM6.29bil.

Asked whether its financial position raises concerns over funding the second nationwide 5G network, U Mobile declines to comment on its financial performance, funding arrangements, profitability outlook, shareholder matters or other commercially sensitive information beyond what has already been publicly disclosed.

“We remain focused on executing our strategic priorities and delivering on our commitments as Malaysia’s next-generation 5G network provider,” the company says in a reply to StarBiz 7.

Nevertheless, industry observers caution against reading too much into the current numbers.

“Taken on its own, any entity with such a loss would be a concern. However, it remains to be seen what its future plans are and that may be the main lens through which investors, lenders and regulators are viewing matters,” Khair Mirza, head of airport investor resource and industry research at Modalis Infrastructure Partners, tells StarBiz 7.

His point is simple: infrastructure businesses are long-gestation investments. Today’s losses matter, but consideration should be given on the company’s ability to execute its business plan.

The irony is that Malaysia originally adopted the single wholesale network model because policymakers believed duplicating infrastructure would be inefficient. Digital Nasional Bhd was established to build one nationwide 5G network that all operators could use, avoiding duplicated capital expenditure while accelerating rollout.

“The most efficient way was not to have duplicate networks running. That fast-tracked 5G because it was of national importance,” one industry observer says.

Such thinking is hardly unique. Many European markets now share active 5G infrastructure through multi-operator core network arrangements, allowing operators to compete commercially without each building identical networks.

But the government ultimately concluded that introducing a second network would strengthen competition and improve resilience.

Whether that decision proves right will depend on the economics.

Following the CelcomDigi merger, Malaysia’s two largest operators control more than 75% of mobile subscribers and an even larger share of industry revenue.

That concentration has prompted questions over whether there is enough room for another nationwide infrastructure player.

Khair believes there is. He points to Singapore and Australia, where dominant incumbents continue to face pressure from smaller operators and mobile virtual network operators (MVNOs).

“In theory, a recent or existing mobile network operator or MVNO could make the second nationwide 5G network viable,” he says, but stresses that the key is execution.

Wholesale is critical

One of the biggest differences between the first and second network is U Mobile’s emphasis on wholesale.

Kenanga Research believes wholesale monetisation will be central to improving the economics of the network.

Having surpassed the 80% coverage of populated areas milestone, U Mobile has signed wholesale agreements with VIBE Mobile, Eastel and Telekom Malaysia Bhd (TM), allowing it to spread fixed infrastructure costs across a broader customer base.

Khair agrees that wholesale customers could materially strengthen the business case. He says future agreements with TM’s Unifi Mobile or regional MVNOs could significantly improve network utilisation and commercial returns.

Simply put, the more traffic flowing across the network, the more viable the investment becomes.

Even so, financing remains a key watchpoint. Khair says U Mobile may eventually require additional equity injections, shareholder support, vendor financing or other funding beyond its existing RM4.3bil banking facilities, depending on how the rollout progresses.

Interestingly, he does not consider financing to be the biggest risk. Instead, he identifies network rollout, customer migration and maintaining service quality as the three critical execution challenges.

For investors, that means looking beyond headline losses.

Subscriber growth, wholesale partnerships, enterprise contracts, earnings before interest, taxes, depreciation and amortisation performance, and network utilisation are likely to provide a clearer picture of whether the second network is succeeding.

Competition without a price war

The emergence of a second network has also not triggered the destructive price war many expected. Instead, competition has become more disciplined.

Hong Leong Investment Bank Research notes that CelcomDigi Bhd, Maxis Bhd and even U Mobile have all raised entry-level mobile plan prices this year, albeit alongside larger data quotas.

The research house believes operators are becoming more rational as they seek sustainable returns from heavy 5G investments, rather than competing solely on price.

Kenanga Research shares a similar view, expecting competition to centre on richer data packages rather than outright price cuts, particularly in the prepaid market.

Malaysia’s dual-network strategy is no longer a policy debate. It is now an execution challenge.

If U Mobile can attract wholesale partners, grow subscribers, maintain service quality and secure the necessary funding, the government’s decision to back a second network could prove justified.

If it struggles to achieve scale or commercial sustainability, questions over whether Malaysia needed two nationwide 5G networks will inevitably resurface.

For now, analysts are reserving judgment. The balance sheet raises legitimate questions, but infrastructure projects are measured over decades rather than years.

As Khair notes, the focus should not be solely on today’s losses, but on whether U Mobile can demonstrate a credible path towards sustainable growth.

The next three to five years should provide the answer.

Only then, will it become clear whether Malaysia’s dual-network strategy has strengthened the country’s digital ambitions – or simply divided one market between two expensive infrastructures.