Following a recent report that six telcos are expected to sign a shareholders agreement for a stake in Digital Nasional Berhad (DNB) early next month, Communications and Multimedia Minister Tan Sri Annuar Musa revealed that the government aims to make an official announcement next week.
During an event, he told reporters that an announcement will be made soon on the plan to sell 70% equity stake in DNB to six companies. He added that the telcos have reached a certain understanding and everything will be concluded by next week, by the 8th of July. There are currently no details on the shareholding and whether the big four telcos would be given a majority stake as demanded earlier.
To recap, DNB is a government’s owned special purpose vehicle that’s mandated to roll out a national 5G network. This means only DNB will be given the spectrum to build a 5G network and other telcos can only offer 5G through a wholesale agreement. After months of pushback by the industry, the Malaysian government announced in March that it will continue to rollout 5G with DNB as the single wholesale network. The Ministry of Finance also announced that it will reduce its stake in DNB from 100% to 30%, giving telcos the opportunity to take up an equity stake.
The big four telcos namely Celcom, Digi, Maxis and U Mobile said they are open to the proposal but it has to be done through a Mergers and Acquisition process. Annuar Musa said recently that he wants to issue licences to new players if the number of telcos participating in DNB is not enough.
Besides the equity stake, the big four telcos were reluctant to sign commercial 5G wholesale agreements with DNB due to pricing and transparency concerns. In a joint statement released in April, the four telcos said DNB’s Reference Access Offer (RAO) will not offer affordable and quality 5G services.
One of the major concerns includes the 5G wholesale pricing of RM30,000 per Gbps per month that is locked to a period of 10 years. While the government claims that the Single Wholesale Network approach will help telcos to reduce heavy upfront investments, it was forecasted that telcos such as Celcom, Digi and Maxis could be forking out between RM7.4 to 8.4 billion each to DNB for a period of 9 years. The forecasted wholesale cost is higher than the estimated cost to build their own 5G network.
There are also regulatory concerns that the MCMC does not have the sufficient tools and instruments to regulate a single wholesale network such as DNB. The current Mandatory Standard on Access Pricing (MSAP) and Mandatory Standard of Quality of Services (MSQoS) require a much needed revision as they do not cover 5G.
According to a report by Singapore’s The Straits Times published yesterday, a non-binding term sheet has been agreed upon by the six telcos. Based on their sources, the report said DNB would offer discounted pricing for 5G wholesale access until the 80% nationwide coverage target is achieved by the end of 2024. It also added that the agreement will be tied to a price review that’s overseen by the MCMC every three years.
Despite reports that Telekom Malaysia and YTL Communications have agreed to an equity stake in DNB, there are no official announcements from the respective telcos. Telekom Malaysia has confirmed to us last week that it has not signed up with DNB for commercial 5G access and they are still assessing and working on concluding their negotiations with DNB to meet the deadline. Meanwhile, a YTL Communications representative told us that they are on track to meet the deadline.
At the moment, YTL Communications’ Yes 5G remains the only telco to offer commercial 5G services in Malaysia since DNB’s network went live on 15th December 2021. DNB’s 5G coverage areas currently cover selected areas in Kuala Lumpur, Cyberjaya and Putrajaya, and they have started expanding into other states including Penang and Johor.
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Related reading
- Annuar Musa says UMNO Youth misinformed about Malaysia’s 5G development, will hold special briefing this Friday
- Report: Six telcos to finalise 5G agreement in early July, DNB to offer discounted rates until 80% coverage achieved
- TM hasn’t signed up with DNB for commercial 5G access, aims to meet 30 June deadline
- Five reasons why Celcom, Digi, Maxis and U Mobile are reluctant to accept DNB’s 5G access offer
