This article first appeared in The Edge Malaysia Weekly, on February 8 - 14, 2016

AS it turns out, Malaysia still has 5MHz of the 900MHz spectrum band on hand at its disposal. This is an asset that could well be up for grabs via competitive bidding, observers say.

The bidding would be an avenue for additional revenue for the government. Recall that Prime Minister Datuk Seri Najib Razak had said the government intends to “optimise revenue from the telecommunications spectrum through a redistribution and bidding process” (official English text translation of speech delivered in Malay) when revising Budget 2016.

So far, only details of spectrum reallocation or “redistribution” have been announced. There is no mention of whether a “bidding” exercise would still take place.

We know that Maxis Bhd had to give up 2x6MHz of its spectrum in the 900MHz band while Celcom had to give up 2x7MHz in the same band, leaving each with 2x10MHz.

DiGi.Com Bhd was allocated 2x5Mhz spectrum in the 900MHz band — 2x3MHz more than it previously had. U Mobile Sdn Bhd, the smallest of Malaysia’s 3G spectrum holders and the only one without any spectrum in the 900MHz and 1800MHz bands, was also allocated 2x5MHz in the 900MHz band. This leaves another 5MHz vacated by Maxis and Celcom still in the hands of the MCMC.

U Mobile was also the recipient of the 2x15MHz in the 1800Mhz band, previously equally owned by Maxis, Celcom and DiGi, which are now each left with 2x20MHz respectively in the 1800MHz band.

In general, additional spectrum can help reduce capital expenditure, which means capex might need to rise if the players do not have additional spectrum in the lower band to make up for any loss in the 900MHz band. Malaysia also plans to reallocate 700MHz spectrum, 2300MHz and 2600MHz band by year-end. Spectrum in the lower bands is generally better for wider coverage while spectrum in the higher bands has bigger capacity to handle data traffic.

As Malaysian Communications and Multimedia Commission (MCMC) chairman Datuk Seri Halim Shafie has said the 900MHz and 1800MHz spectrum will be reallocated among four players — Celcom, DiGi, Maxis and U Mobile — which have “sufficient infrastructure to expand on, to increase competition in the industry”, the remaining 5MHz in the 900MHz band could well go to one of the four players.

At the time of writing, the MCMC had yet to revert requests for more details about the fee for the reallocated spectrum to be assigned to the four by August 2016, for full implementation by July 1, 2017. The MCMC did not say how it arrived at the size of the new 900MHz and 1800MHz spectrum allocations.

Maxis, Celcom and DiGi had 85% of Malaysia’s total mobile subscriber base as at end-Sept 2015 while U Mobile is looking to grow subscribers and profitability ahead of a possible IPO within the coming three years. 

There are those who think U Mobile did not get the remaining 2x5MHz in the 900MHz band due to its smaller resources, but others reckon that DiGi’s balance sheet has the most headroom to absorb the remaining block at a higher price.

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