PETALING JAYA: Digital Nasional Bhd’s (DNB) completion of a RM5.2bil syndicated Islamic term financing marks a significant step in Malaysia’s transition to a dual 5G network, providing the wholesale network operator with a longer-term funding structure as ownership shifts towards its three mobile network operators (MNO) shareholders.
The financing, among the largest syndicated facilities arranged for an unlisted Malaysian company, refinances DNB’s Government Guarantee Revolving Credit Facility, which expired on Sept 29.
It is also intended to facilitate the planned exit of the Ministry of Finance Inc (MOF Inc) as an ordinary shareholder and the transition to equal ownership among CelcomDigi Bhd
, Maxis Broadband Sdn Bhd and YTL Power International Bhd, expected in early fourth quarter of 2026 (4Q26). MOF Inc will, however, retain a special share in DNB.
The development comes alongside the award of the full 100MHz in the 3.3GHz to 3.4GHz band and the conversion of DNB’s entire 240MHz spectrum holding into a Spectrum Assignment, effective Oct 1.
DNB said in a statement yesterday that the new spectrum arrangement gives it greater regulatory certainty and provides additional capacity for network expansion, including technologies such as Massive MIMO, carrier aggregation, 5G Advanced and AI-driven network capabilities.
DNB chief executive officer Datuk Azman Ismail said, “The successful completion of this RM5.2bil financing exercise marks a significant milestone for DNB and reflects strong confidence in our business fundamentals, operational track record and long-term role in Malaysia’s digital economy.
“This financing provides DNB with a sustainable platform to operate on its own, continue investing in network enhancement and capacity expansion, and leverage our expanded spectrum assets.”
According to an industry expert, the financing gives DNB the money to operate and invest; the spectrum gives it the capacity and regulatory certainty to do so. Together, they address two major pieces of DNB’s long-term business model.
He added the conversion of DNB’s entire 240MHz spectrum holding into a Spectrum Assignment removes a key layer of regulatory uncertainty at a critical juncture, giving DNB and its MNO shareholders greater visibility to make long-term network investments and extract greater utilisation from the 5G infrastructure.
However, he said the spectrum itself does not automatically translate into higher profits for DNB.
“The commercial question is how effectively DNB can utilise and monetise that spectrum. It still needs sufficient wholesale demand from MNOs, appropriate access pricing and network utilisation to generate the cash flow required to service its new RM5.2bil financing and fund future investments,” he told StarBiz.
Analysts had previously identified DNB’s funding requirements as one of the key uncertainties facing the sector.
Kenanga Research said in September that visibility remained limited over whether DNB would require further shareholder funding before reaching sustainable cash-flow breakeven.
The research house estimated DNB’s net loss could narrow from RM1.21bil in financial year 2024 (FY24) to RM750mil and subsequently RM500mil in FY27.
It also estimated DNB-related losses could have an 8% impact on the FY27 earnings of both CelcomDigi and Maxis.
CelcomDigi, in a statement yesterday, noted the financing is expected to reduce the need for additional equity funding from its MNO shareholders, allowing them to focus instead on improving the efficiency and performance of the 5G network.
The company added that DNB’s 200MHz of contiguous mid-band spectrum provides a foundation to meet growing consumer and enterprise demand, while its own nationwide network footprint could be combined with DNB’s infrastructure to improve 5G capacity, coverage and customer experience.
“CelcomDigi will bring its scale, nationwide network assets and more than 30 years of telecommunications experience to support DNB – leveraging existing infrastructure, sites and capabilities to drive cost efficiencies, support coverage expansion and accelerate indoor 5G deployment.
“Synergies between DNB and shareholders’ infrastructure will support a more efficient and sustainable 5G network,” it said.
This raises the prospect of greater infrastructure sharing and cost efficiencies as the MNO shareholders take a more active role in DNB. Credit-rating agencies had also highlighted the potential funding issue.
MARC Ratings said last week that DNB-related funding requirements remained the principal uncertainty in CelcomDigi’s cash-flow outlook. Its cumulative investment in DNB stood at RM879.9mil, although MARC said any additional commitments were expected to remain manageable, given the group’s cash-flow generation and moderating capital expenditure.
RAM Ratings similarly said CelcomDigi’s cumulative funding contributions of RM551.9mil and acquisition outlay of RM327.9mil had not materially affected its credit profile.
However, it cautioned that additional funding could be required to support DNB’s future operating and financing needs, with materially higher commitments potentially weakening CelcomDigi’s financial metrics.
MBSB Research had earlier said DNB’s financial condition was expected to improve steadily, while noting that a favourable cost structure would remain important to profitability. The research house also expected earnings risks from DNB to Maxis and CelcomDigi to diminish over time.
The new financing will place DNB on a more commercial funding footing, but the company remains a loss-making infrastructure operator whose financial sustainability ultimately depends on network utilisation, wholesale pricing, operating costs and the pace at which demand for 5G services grows.
Beyond DNB, BIMB Securities Research noted that 5G monetisation itself remains a structural challenge, with operators still struggling to translate higher network speeds and capacity into meaningful average revenue per user uplift, particularly in the consumer segment.
It has maintained a “neutral” stance on the telecoms sector with Axiata Group Bhd remaining its top pick, premised on asset monetisation exercise and higher dividend payout.
