Report: Maxis and U Mobile refuse DNB stake deal, citing no benefit being minority shareholder

[ UPDATE 31/08/2022 18:30 ] DNB says six telcos were supposed to sign the Share Subscription Agreements on 30th August but two backed out in the last minute. It claims that other four telcos remain interested in the equity deal.

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Communications and Multimedia Minister Tan Sri Annuar Musa recent said that all major telcos will sign up with Digital Nasional Berhad (DNB) on 31st August which would put an end to the ongoing 5G stalemate. While waiting for telcos to make an announcement, a report from Reuters reveals further setbacks as Maxis and U Mobile allegedly refused to take equity stake in the government-owned single wholesale network.

Citing sources close to the matter, Reuters reported that the decision by the two major Malaysian telcos come after the Malaysian government turned down proposals for the big four telcos to acquire a combined majority stake. The source said both Maxis and U Mobile could not see benefits of being a minority share holder in DNB.

In March this year, the Ministry of Finance (MOF) had offered telcos a 70% stake in DNB in an attempt to solve the 5G stalemate. It was reported that MOF will inject RM500 million for its 30% stake, while each of the six telcos will have to fork out RM200 million for about 12% stake in the single wholesale network.

In a letter sighted by Reuters back in May, the big four telcos consisting of Celcom, Digi, Maxis and U Mobile told the government, “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.” The letter added, “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.”

Despite not taking a stake, Reuters reported that Maxis and U Mobile are still seeking to gain 5G access from DNB through commercial wholesale agreements. However, it isn’t clear if MOF would allow them to do so without taking a stake in DNB. Finance Minister Tengku Zafrul had recently said that telcos would have to agree to DNB’s terms by 31st August or risk losing out on 5G access. The Minister also said there are foreign players who are queuing up to get access to the Malaysian market.

Celcom CEO Datuk Idham Nawawi recently revealed that Celcom customers may experience 5G as early as September provided there are no hindrances and everything runs smoothly. At the moment, Axiata (Celcom’s parent company), Digi and Telekom Malaysia have not made any 5G-related announcements through Bursa Malaysia.

YTL Communications’ Yes 5G remains the first and only telco in Malaysia to provide 5G services to consumers. DNB’s 5G network currently claims to cover 30% of the population nationwide and has 90% 5G population coverage in Kuala Lumpur, Putrajaya and Cyberjaya. It aims to achieve 40% 5G population coverage by end of this year and 80% by end of 2024.

Related reading

• 5G in Malaysia: What’s the progress so far? | Let’s Talk About #102
• 5G Malaysia: Annuar Musa now says telcos will sign DNB deal by 31 Aug, MCMC to decide on a few terms
• Tengku Zafrul: Telcos have until 31 Aug to agree to DNB terms or risk losing out on access to 5G
• Celcom customers can try 5G service in September if there are “no hindrances”