This article first appeared in The Edge Malaysia Weekly on August 29, 2022 - September 4, 2022
ALL six Malaysian mobile network operators (MNOs) have confirmed their interest in taking up 70% equity in Digital Nasional Bhd, but a surprise “curveball” could push back the conclusion of commercial negotiations on wholesale access by the government-imposed Aug 31 deadline.
It is learnt that Schedule 2 of the Reference Access Offer (RAO) on pricing and fees for wholesale access to DNB’s 5G network was still pending approval by the Malaysian Communications and Multimedia Commission (MCMC) as at Aug 26.
Separate sources confirmed that Schedule 2 — which had been appended in the RAO as early as March — had yet to be approved by MCMC after five months, and they agree that it could be a potential snag to meeting the deadline set two months ago when non-binding term sheets were signed with DNB on July 1.
It is understood that the reason for the delay was that MCMC had hired a consultant, NSL, to independently vet DNB’s supply-led pricing approach for the single wholesale network (SWN) to cover 80% of populated areas by 2024 and deliver at least speeds of 100Mbps even at the farthest part (edge) of cell coverage.
A source confirmed that NSL had proposed a different pricing model for 5G, which one source says would make 5G more expensive for consumers.
Still, the source would not rule out the possibility of telecommunication companies (telcos) and DNB signing an agreement to support the government’s desire to bring 5G services earlier to consumers.
“An agreement for equity can still be signed [by Aug 31], with adjustments made when MCMC approves Schedule 2,” a source says, noting that “progress” was also made ahead of the earlier June 30 deadline.
“There may be some spillover [into September, like the previous June 30 deadline], but there are still two full working days before Merdeka,” another source says, adding that an agreement can still be sealed because Aug 31 is a government-set deadline. “Everyone is still working towards that Aug 31 deadline … No new deadline has been discussed [to finalise the access agreement].”
Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz has on separate occasions told reporters that the government wants no further delays and that MNOs have been told to meet the Aug 31 deadline or risk losing their place at the table to foreign players.
Meanwhile, Communications and Multimedia Minister Tan Sri Annuar Musa has told reporters that 5G services could be rolled out by all six major telcos as early September, given that access negotiations are supposed to conclude by Aug 31, when Malaysia celebrates its 65th National Day.
Some 90% of populated areas in Kuala Lumpur, Putrajaya and Cyberjaya already have 5G coverage, YTL Communications CEO Wing K Lee told Astro Awani, according to an Aug 21 Soya Cincau report posted on YTL Corp Bhd’s website. According to him, DNB, which is working to cover 40% of populated areas by end-2022, has already reached the 30% mark.
The report also quotes Wing as saying that YES 5G customers are enjoying average speeds of 577Mbps downlink with peak speeds of up to 1.5Gbps — which trump most home broadband connections.
At the time of writing, DNB’s website claimed average speeds of 574Mbps and that it was “committed to delivering a minimum download speed of 100Mbps across the network”. It also noted, however, that connection speeds were influenced by several factors, including the type of device and one’s proximity to the test server.
YTL is the only one among the six telcos — that have been invited to take up 11.67% equity in DNB for about RM200 million each — to offer customers 5G SIM packs currently. Celcom and Digi, which have been given the green light by the MCMC to merge, will be allowed to keep a 23.3% stake, as it is still below the cap of 25% for a single player, a source says.
“If, say, Maxis merges with U Mobile, they will also be allowed to keep a 23.3% stake, [but an enlarged MNO] that merges with another DNB equity holder will need to give up part of the stake to comply with the 25% ceiling,” the source adds.
The price tag of RM200 million for each of the six telcos is derived from the government’s injection of RM500 million into DNB for its 30% stake.
While the free access period to DNB’s 5G network had ended on June 30, it is learnt that YTL is not being charged as yet for access to the network “because there is no access agreement”.
“More consumers in Klang Valley are already trying out 5G,” the source says. “A 5G phone with dual SIM, for instance, would give customers access to the 5G network while also keeping existing [4G] phone coverage.”
Malaysia may well only see telcos agreeing to the 70% equity participation this week, but policymakers must continue to put their foot down to make sure real progress is made so that 5G adoption kicks off. The country is already behind Singapore and Thailand on commercial roll-out and risks being left further behind should delays be entertained. Singapore Telecommunications Ltd, for instance, said on Aug 25 that the S$2.25 billion (RM7.23 billion) raised from selling a 3.3% stake in India’s Bharti Airtel Ltd would be used to fund 5G investments and business expansion.
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