Malaysia’s wholesale 5G network finally attracts telco stakeholders
- Four mobile operators have caved in and taken a stake in Malaysia’s wholesale 5G network operator, DNB
- The operators were suspicious of the government’s bureaucratic “single neutral party” approach, but are now stakeholders
- Nationwide 5G is to be financed exclusively by the private sector
- Suggested government rules on which 5G handsets can be sold are being relaxed
- Hopes are now that 80% of the country will have access to 5G by end of 2024
Malaysia’s bold 5G dream to build a single national wholesale 5G network that all mobile operators would use is still alive, but only just. In March 2021, the country’s government established the Digital Nasional Berhad (DNB) as the country’s sole wholesale 5G network operator with the remit to roll out the nationwide entirety of Malaysia's 5G network. The DNB belongs to Malaysia’s Ministry of Finance and is classified as “the single neutral party” empowered “to deploy 5G under the terms of the Communications and Multimedia Act 1998 to provide wholesale 5G coverage and capacity to other licensees under the Act.” It sounds straightforward enough in theory, but has proved to be something of a bugbear in practice.
The DNB’s role is to “collaborate with relevant stakeholders including government, regulators, state and local authorities, network equipment providers, telecommunications operators, infrastructure owners, as well as various user groups which will benefit from the use of 5G products and services”, and there’s the rub. The main stakeholders in Malaysian 5G include the appointed network equipment provider (NEP) Ericsson, mobile network operators (MNOs) and other licensees, site owners, fibre optics providers, power and utility players and financial institutions. It turns out that not all the bodies in that list have the same objectives and some don’t particularly want to play nicely together.
The DNB plan calls for the total cost of 5G deployment to be financed exclusively by the private sector, “with no government funding or development expenditure involved”. Last November, the DNB announced it had secured “working capital financing” of 400m Malaysian Ringgit (MYR) (US$85m) from Deutsche Bank. The estimated total cost of 5G deployment in Malaysia between 2021 and 2024 was 5bn MYR (US$1.06bn). According to the deployment timetable, 40% of the country will have 5G coverage by the end of this year and 80% by the end of 2024. Some limited areas of the Malaysian capital, Kuala Lumpur, had 5G services in December 2021.
The DNB, simply by virtue of being part of a government department, is predisposed to bureaucracy, so it’s not surprising that its convoluted working practices and, indeed, its very existence has been roundly criticised by various bodies, including telcos, which have called for an alternative, competitive wholesale 5G provider to be allowed to enter the market.
There had also been concerns about the DNB’s requirement that only 5G handsets from “tested and authorised” suppliers would be allowed to connect to the 5G network, the result of which, until earlier this year, was that handsets from manufacturers including Apple, Asus, Samsung and Sony were effectively blocked from use, while handsets from Chinese manufacturers such as Huawei and ZTE could be used. These anomalies and other strictures on tariffs and pricing meant that telcos had been extremely reluctant to take up any stakes in then DNB and that, in turn, had the knock-on effect of delaying 5G rollout, but those device restrictions have now been relaxed.
Mobile operators have been very reluctant to buy into the DNB
For months now, the government has been cajoling and persuading Malaysian telcos to buy into the DNB scheme and, back in February, was prepared to go as far as diluting the DNB’s stake in 5G by offering 70% of it to six nominated mobile operators to get itself out of the bind it had caused in the first place. Finally, last week, four major national telcos broke ranks, with Celcom Axiata, DiGi Telecommunications, YTL Communications and Telekom Malaysia opting to collectively take a 65% equity stake in DNB, and the Malaysian government retaining the balance of 35% plus a ‘golden share’ that will give it powers to control the sale of shares.
A DNB announcement revealed that YTL Communications and Telekom Malaysia have each bought a 20% stake, Celcom Axiata and Digi Telecommunications have taken a 12.5% share each (they each have a smaller stake because there are plans for them to merge in 2023). The remaining refuseniks, Maxis Bhd and U Mobile, declined to buy into the equity deal.
Commenting on the breaking of the logjam, the chairman of the DNB, Yang Berbahagia Datuk Seri Asri Hamidon, said: “I am pleased that the MNOs have taken up the equity offered by the government… I expect that all parties will make every effort to deliver 5G availability to all their Malaysian and global ‘roaming’ customers. The MNOs, in particular, have a crucial role to play in ensuring the accelerated adoption of 5G among end users.
“As of today, the 5G network has achieved 33% coverage of populated areas against a target of approximately 40% by end 2022. The testing and integration of 5G sites by the MNOs have progressed well and I believe they are ready to provide 5G services to end users located in areas where 5G infrastructure is currently available. In addition, the local 5G ecosystem has grown rapidly, with 12 device brands now offering more than 100 5G-compatible models for use in Malaysia,” he added.
Last year, extremely popular 4G services accounted for 87.8% of all mobile subscriptions in Malaysia.
– Martyn Warwick, Editor in Chief, TelecomTV
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