Telecoms

Malaysia readies RM16bil 5G network as telcos mull stakes

Malaysia trails Singapore, Vietnam, Thailand, the Philippines and Indonesia in terms of mobile download speeds.

Bloomberg

 -June 1, 2022 1:48 PM

Malaysia trails Singapore, Vietnam, Thailand, the Philippines and Indonesia in terms of mobile download speeds.

KUALA LUMPUR: Trailing regional rivals in the race to offer 5G mobile services, Malaysia is finally pressing ahead with a plan to roll out the high-speed network across the country even as local carriers wrangle over equity participation in the project.

State-owned Digital Nasional Bhd (DNB), which is building the infrastructure at a cost of RM16 billion spread over 10 years, has offered all nine telecommunication companies in the country equal stakes totalling as much as 70% by June 30. But the top four carriers have been pushing for a combined 51% majority stake to themselves instead.

The government intends to deploy the network regardless of the operators’ decision, DNB chief executive officer Ralph Marshall said in an interview. If the carriers do not reach an agreement, the government will look at other options for equity financing, he said.

“Basically, if you don’t come in, we just have to open up the market,” Marshall said last week at his office in Kuala Lumpur. “The principle is accelerating the deployment and adoption of 5G in the national interest.”

Ralph Marshall.

Malaysia has been one of the 5G laggards in Southeast Asia. In terms of average mobile download speeds, it trails Singapore, Vietnam, Thailand, the Philippines and Indonesia, which have rapidly rolled out the network, according to a report by Opensignal. 5G coverage in Malaysia is still spotty with limited access in Kuala Lumpur, Cyberjaya, and Putrajaya.

DNB aims to have a 5G network with 40% reach in densely populated areas by the end of this year, compared to about 15% as of March, according to Marshall. It targets to extend it nationwide to 80% in populated areas by 2024, he said.

Cheaper than 4G

At the same time, the infrastructure provider is also seeking to keep tariffs affordable. It is charging carriers less than 20 sen per gigabyte for 5G service, finance minister Tengku Zafrul Aziz said in Parliament in November. That compares to a rate of between 45 and 55 sen per gigabyte for 4G services, he said.

But the debate on the network has mostly centred around the purchase of equity in DNB by the nation’s carriers. Celcom Axiata Bhd, DiGi.com Bhd, Maxis Bhd and U Mobile Sdn want a 51% majority stake, communications minister Annuar Musa said, according to a Bernama report on May 26. Celcom is trying its best to meet the deadline process, Axiata Group CEO Izzadin Idris said on May 26. Izzadin stepped down on May 31.

“DiGi continues discussions with the government, MCMC (Malaysian Communications and Multimedia Commission) and DNB with regards to various aspects of 5G, and according to processes in place. We will comment on vital milestones as they occur,” a DiGi spokesman said by email on Tuesday.

Celcom, Maxis and U Mobile did not immediately respond to requests for comment.

YTL Communications Sdn Bhd, a unit of YTL Power International Bhd controlled by tycoon Francis Yeoh, is one of two telecommunication firms that have signed up to use DNB’s 5G infrastructure so far, a Bernama report cited Annuar as saying. The other one is fixed-line operator Telekom Malaysia Bhd.

Last week, YTL launched a 5G-ready mobile network plan, which offers average data charges of 30 sen per gigabyte, according to a statement.

DNB needs as much as RM6 billion in terms of working capital facilities to roll out the planned 5G network, Marshall said. The company has secured RM500 million in short-term financing from Deutsche Bank AG and RM800 million from United Overseas Bank Ltd, according to him.

DNB is also planning a RM5 billion sukuk bond to take over these short-term financing, Marshall said.

The RM16 billion cost, outlined by Marshall, covers mainly 5G network equipment and infrastructure, of which Ericsson is a provider, according to DNB’s official website.

Source: Malaysia readies RM16bil 5G network as telcos mull stakes | Free Malaysia Today (FMT)

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