DNB: Ericsson's RM11b 5G bid is RM700m lower than nearest competitor

(Photo by Reuters)

(Photo by Reuters)

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KUALA LUMPUR (July 8): Digital Nasional Bhd (DNB) said today that the financing of network equipment for the National fifth-generation (5G) Network will be sourced from foreign and domestic financial institutions.

It reiterated that Ericsson (Malaysia) Sdn Bhd has undertaken to arrange the financing as part of the agreement to supply, deliver and manage the entire 5G network, while DNB will securitise future cash flow from its wholesale business with mobile network operators, via Sukuk programmes to finance its other network operating expenditure and meet its obligations to repay financiers when they become due.

"Accordingly, there will be no government funding required for the 5G network roll-out," it noted in a statement today.

Last week, DNB announced that it had appointed Ericsson to design and build the National 5G Network at a total cost of RM11 billion.

In the statement today, DNB revealed that the design, build and maintenance of the Malaysian 5G Network managed by Ericsson is estimated to cost RM11 billion and that is "around RM700 million lower than the total cost of ownership of the next closest bid".

"Ericsson's network equipment, deployment services, and ongoing maintenance and network management cost of RM4 billion was the lowest. The balance of approximately RM7 billion will cover network infrastructure costs from other parties comprising primarily tower rental and fibre leasing over a 10-year period," it said.

DNB — the government-owned special-purpose vehicle undertaking the deployment of the 5G infrastructure and network nationwide — also reiterated that more than 60% of the spend on the network infrastructure will directly benefit bumiputera interest in the telecommunications industry and bumiputera contractors.

In addition to the network investment, Ericsson is also committed to contributing to Malaysia's knowledge economy, specific to job creation, 5G-related knowledge building and other socio-economic benefits estimated to be valued at RM4 billion over the life of the contract, DNB said.

Shedding light on tender process

Also today, DNB revealed that its tender process was structured by an independent professional services firm, Ernst & Young Consulting Sdn Bhd (EY Consulting), which it said was done according to global standards and involved four panels, comprising some 50 local and international experts from across 10 countries with current 5G network roll-out experience.

The process began with the initial evaluation of 14 Network Equipment Providers (NEPs), after which, eight were shortlisted and invited to bid for the tender, DNB added.

According to DNB, the criteria evaluated when shortlisting the NEPs were:
a. Proven credentials in successful 5G deployment and execution of end-to-end technology solutions;
b. Availability of enhanced security to safeguard users and platforms;
c. Established Malaysian presence and ecosystem and a sound understanding of the business environment including existing network of vendors;
d. Locally based resources for immediate deployment; and
e. Effective plan for the transfer of knowledge to be acquired by domestic affiliates.

Of the eight invited, only four submitted their bids, DNB said.

It also noted the tender evaluation team comprised internal and external independent industry experts and experienced professionals, and the tender results were then deliberated extensively by the board tender committee and the board of DNB.

"The strictest standards of governance were adopted throughout the tender process as advised and facilitated by EY Consulting," it said.

The tender requirements were based on criteria identified and refined through a rigorous process with industry feedback on the requirements of the 5G network and shared with all invited NEPs, it added.

DNB shared that Ericsson was ranked top in all three key components of the tender evaluation criteria, which were the following:
a. Technical: covering overall 5G technology capabilities, 5G deployment capabilities, integration approach, cyber and network security, and operations and maintenance
b. Commercial: covering financing proposal and total cost of ownership
c. Socio-economic: covering local development and socio-economic impact

Opposition leader Datuk Seri Anwar Ibrahim recently called on the government to make public the details of the 5G contract it awarded Ericsson.

Meanwhile, in its statement today, DNB also noted that together with Ericsson, they are on track to launch Malaysia's 5G network in areas within Kuala Lumpur, Putrajaya and Cyberjaya by December 2021, with the objective of achieving 80% nationwide population coverage by 2024.

"DNB looks forward to working closely with all parties — government, industry, businesses and the rakyat — to ensure the nation is adequately equipped with the necessary 5G infrastructure to embrace and benefit from the digital economy in the near future," it stated.

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