The Malaysian government is this week standing firm against pressure from telcos to change its strategy surrounding 5G mobile services. 
Rather than auctioning off 5G spectrum, as is the norm in most countries around the world, in 2021 Malaysia chose to set up a national wholesale 5G network operator, DNB. The government reasoned that this would allow for a faster and more equitable rollout of the new technology across the country and greatly reduce unnecessary overbuild by rival operators…

The Malaysian government is this week standing firm against pressure from telcos to change its strategy surrounding 5G mobile services. 

Rather than auctioning off 5G spectrum, as is the norm in most countries around the world, in 2021 Malaysia chose to set up a national wholesale 5G network operator, DNB. The government reasoned that this would allow for a faster and more equitable rollout of the new technology across the country and greatly reduce unnecessary overbuild by rival operators. 

The existing mobile players, however, disagreed, saying that the prices DNB charged were too high and that they would have been able to deploy 5G in a more effective and affordable way themselves. 

By the end of 2021, only a few very minor mobile players had signed up for DNB’s services, leading the government to change tack in early 2022 and offer the telcos a combined 70% stake in DNB.

While this plan was initially met with approval from the telcos, upon closer inspection they insisted that individual minority stakes would still not offer them good value. The four largest operators – Digi Telecom, Celcom Axiata, Maxis, and U Mobile – made a joint suggestion that those four alone should own a combined 51% stake of DNB, but this was rejected by the government last month. 

Now, the operators have a deadline of the end of the month to agree to a stake or else lose out on access to 5G spectrum entirely. 

Today, despite pushback from the mobile industry, the Malaysian government is sticking to its guns, saying that the end-of-the-month deadline will stand. If the telcos refuse, then licences could instead be offered to new market entrants.

« The larger issue is Malaysians’ and businesses’ access to 5G technology. If telcos, particularly the larger ones, continue to delay providing 5G services to their customers, as recently mentioned by the Minister of Communications and Multimedia, his Ministry will consider other options such as issuing new licences to new players to enable the speedy delivery of 5G services in the country,” said Finance Minister Tengku Zafrul to The Straits Times. « Indeed, the interests of Malaysia and its people must take precedence over the telcos’ narrow commercial interests. »

The Malaysian government has estimated that the rollout of 5G could create around 750,000 high-value jobs and boost the economy by almost $15 billion by 2030.

He said that no operator will be allowed to hold a stake in DNB greater than 20%, or 25% in the case of mergers between the operators, while the Ministry of Finance will retain its 30% stake.

“All 5G spectrum will be available only through DNB,” he said. “DNB is able to obtain financing to fund the network rollout because 5G services will undoubtedly be in demand in the country. I am aware that DNB has discussed financing with various banks.”

According to sources, various private equity firms are also interested in taking stakes in DNB.

Nonetheless, Tengku Zafrul said that telcos would be prioritised over any foreign investors if they do choose to invest. 

With less than two weeks to go, the future of Malaysian 5G is balanced on a knife edge.
 

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