Report: 5G network investment not as significant if TM deploys on its own

Telekom Malaysia (TM) CEO Imri Mokhtar said TM was ready to support the targeted 5G rollout next month which will bring benefits whether for micro-entrepreneurs in rural areas or new consumers in urban zones. Imri said TM will play an important role as it looks to bring innovative solutions to all Malaysians.

He told Free Malaysia Today that the rollout will require elements of 5G equipment like towers and the fibre front or backhaul that connects to the tower. He added that the associated investment for the 5G network was not as significant if TM had to do it on its own.

He said, “Every year, we allocate a certain amount of capital expenditure for infrastructure. This year, we will invest between 14% and 18% of our revenue towards covering various elements, whether it is fibre, cloud or mobile.”

The CEO said the challenges had now become opportunities after the national telecommunications company had to battle through during the pandemic due to a lack of supply materials. He said this is something that has been resolved and connectivity has become such a big agenda, so the rollout of the 5G network is definitely timely. He also said what is critical is the upskilling of human capital, both private and public partnerships.

According to TM’s latest quarterly report, the group’s operating revenue for January to September 2021 grew by 6.8% to RM8.38 billion compared to the same period last year. The group’s wholesale business, TM Wholesale, prides itself to be the “telco for telcos” by providing wholesale services and solutions to all Malaysian licensed service providers. It recorded a high demand for its wholesale broadband service and they have also registered an increase in bandwidth utilisation of its Next Generation Backhaul service by major mobile telcos.

TM is among several telcos in Malaysia that have expressed their eagerness to deploy 5G and it aimed to deploy the country’s first 5G standalone (SA) network. In January 2020, TM was the first telco in the world to conduct a successful 5G SA test on both 700MHz and 3.5GHz spectrums simultaneously on a converged 5G core.

TM was also looking forward to utilise the 700MHz spectrum band to provide faster broadband in rural areas where fibre broadband is not available. During the 5G Demonstration Project in Langkawi, their 5G network could deliver 1.3Gbps on a 3.5GHz band and 220Mbps on 700MHz. The 3.5GHz band provides high capacity in high-density areas while 700MHz can provide wider coverage for rural areas and interstate highways.

TM was also exploring the use 700MHz to provide both 5G and 4G services simultaneously via Dynamic Spectrum Sharing (DSS). In addition, TM was also running mmWave trials in Subang Jaya for several use cases.

At the moment, Malaysia is deploying 5G via Digital Nasional Berhad (DNB), a state-owned single-wholesale network. Although DNB aims to deploy 500 5G sites by the end of this year, it appears that commercial 5G services could be delayed as telcos have not accepted the wholesale agreement. DNB had earlier refuted claims made by Reuters saying that it has not begun formal negotiations with local telcos as the reference access offer (RAO) was not finalised.

DNB and the Ministry of Finance have said that the cost of 5G data to telcos would be cheaper than what they are currently spending on their existing 4G network. Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz told Parliament that DNB will charge telcos less than 20 sen per GB for 5G versus the current estimated cost of 45-55 sen per GB for 4G.

Tengku Zafrul also said the telcos would pay between RM3.5 billion to RM4 billion over a period of 10 years for 5G, which calculates to RM400 mil year. He said this is far lower than the RM1 billion invested by telcos yearly on their existing networks. The single-wholesale approach is aimed at reducing deployment cost and expediting 5G network deployment in a cost-effective manner. Communications and Multimedia Minister Tan Sri Annuar Musa said the government aims to make 5G services more affordable than 4G through DNB.

Responding to claims that DNB was riding on the infrastructure of existing telcos, DNB COO Dusyan Vaithiyanathan said DNB will lease existing infrastructure from telcos so that 5G can be deployed at a fraction of the cost of building new ones. He added mobile network operators will be getting revenue from the leasing of their existing towers and fibre optic cables.

“I always tell the telcos you can keep complaining but if you take the deal and you can give us a good rate so we can keep our cost down then net-net your price to serve 5G is even less,” he said during the interview.

DNB’s 5G rollout is estimated to cost RM16.5 billion which include RM12.5 billion for network equipment and infrastructure, and RM4 billion for startup costs, consultation fees and staff compensation for over 600 employees. The total cost may swell to RM20 billion between 2025 and 2030 to anticipate any significant increase in capacity demand.

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