Reuters has reported that the big four telcos in Malaysia, namely Celcom, Digi, Maxis, and U Mobile, are seeking a majority state in Digital Nasional Berhad (DNB). This comes after the government offers a 70% equity stake in the single wholesale network in an attempt to solve the 5G stalemate.
Telcos asking for at least 51% stake
According to the report, the telcos have written to the Ministry of Finance on 9th May to counter the government’s proposal to offer a minority stake. The letter stated, “We would not be able to justify a passive minority investment in this venture without being able to exercise influence and control to safeguard our investment.” It added that they are still willing to explore the government’s proposal but a stake of at least 51% would be the most viable to reach an agreement.
The letter also mentions “The MoF-proposed role as minority shareholders does not appear to make it feasible for any of us to add value as shareholders and are not commensurate to our contribution to the industry, or our duty to our shareholders and customers.”
At the moment, the government has not revealed how they will allocate the 70% equity stake to private telcos, however, one of Reuters’ sources has indicated that nine companies were invited to participate. Assuming it’s split evenly to 9 players, the big four telcos would be left with a combined 31.11% stake.
Out of the four telcos, three of them are publicly listed. As of today, Maxis has a market cap of RM28 billion, while Digi is valued at RM26.5 billion. Meanwhile, Axiata Group, which owns Celcom has a market capitalisation of RM29 billion.
DNB’s wholesale 5G pricing remains a concern
Reuters report also mentioned that the letter also called for a review of DNB’s Reference Access Offer (RAO) which outlines the pricing, quality, and service deliverables of the 5G access agreement. The big four telcos have previously voiced out that the RAO in its current form will not enable affordable and quality 5G services for consumers.
According to the RAO document, telcos would have to pay RM30,000 per Gbps per month for the first 1,200Gbps, while subsequent capacity will be charged at RM22,000 per Gbps. The pricing is tied to a ten-year minimum service term.
Currently, only YTL Communications and Telekom Malaysia have signed up for DNB 5G wholesale services. Looking at the latest developments, it appears that the government’s aim to settle the DNB equity stake with the big four telcos might go beyond its current 30th June 2022 deadline.
With mass 5G availability still up in the air, The Edge Markets has recently reported that the top four public-listed telcos including Axiata, Digi, Maxis, and TM have collectively lost RM26 billion in market value. The Malaysian Communications and Multimedia Commission (MCMC) said last month that the 5G access cost concerns were expected to be settled in a week or two, but it looks like the RAO is still a major concern by the big four players.
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Related reading
- While 5G is still up in the air, Malaysia’s telcos have lost RM26 billion in market value. What is MCMC doing?
- Annuar Musa: Only TM and YTL have agreed to own an equity stake in Digital Nasional Berhad
- MCMC: Cost concerns of DNB 5G access offer to telcos to be settled in a week or two
- Celcom, Digi, Maxis and U Mobile: DNB’s access offer will not enable affordable and quality 5G services
