Prime Minister Anwar Ibrahim has said that his administration will review Malaysia’s plan to roll out 5G through state-owned Digital Nasional Berhad (DNB) as there are concerns that it was not formulated transparently. DNB is a 5G single wholesale network which is the sole entity mandated to roll out 5G nationwide. Existing telcos are prohibited from building their own 5G network and will need to lease access from the state-owned network.
During a news conference held today, he said the 5G plans will be evaluated to ensure they strictly follow procedures. Without elaborating on the details, he added that it needs to be reviewed because it was not done in a transparent manner and there was no tender.
The single wholesale network model to roll out 5G has raised concerns from telcos and the industry. This includes the 5G wholesale pricing of RM30,000 per Gbps per month that’s locked to a 10-year period. DNB is said to be rolling out 5G on an aggressive timeline on a supply-driven and cost-recovery approach. The total cost of 5G deployment is expected to be around RM16.5 billion over ten years which includes RM12.5 billion for network costs and RM4 billion for corporate costs including consultation and staff compensation.
As announced last year, DNB aims to achieve 40% 5G population coverage by the end of this year with 4,018 sites and 80% 5G population coverage by the end of 2024 with 7,509 sites. Based on the recent JENDELA Q3 2022 report, DNB seems to be rolling out behind schedule as they have only deployed 1,915 sites nationwide and there’s still no 5G coverage in Sabah and Sarawak.
At the moment, five out of six telcos have signed the 5G access agreement with DNB and four (YTL Communications, TM, Celcom and Digi) have signed their share subscription agreements to take up an accumulative share of 65% in the single wholesale network. The government via the Ministry of Finance holds the remaining 35% share and a golden share.
During the previous Mahathir-led Pakatan Harapan administration, Malaysia was supposed to roll out 5G by Q3 2020 through a private-led consortium. The plan was derailed after the Sheraton move in February of the same year. The Single Wholesale Network during Muhyiddin Yassin’s administration and he has warned that any changes to the model would result in reputational risks to the government which include loss of investor confidence, serious financial and legal implications, loss of economic generation, loss of opportunity cost and the loss of up to 15,000 jobs related to the development of 5G.
In a response to former Bangi MP Dr Ong Kian Ming, DNB CEO Ralph Marshall revealed that over 100 contracts have already been signed and DNB will be subjected to paying a substantial amount of claims and compensation including early termination penalties if the 5G SWN implementation is revoked. He said the total financing from local banks and Ericsson deferred payments amounting to RM1.2 billion for Phase 1 implementation costs will need to be settled as well as termination costs of lease agreements for the lease of DNB office buildings and network infrastructure.
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