5G Network Scheme In Limbo

Telcos that did not want to take up an equity stake in DNB, that is Maxis and U-Mobile so far, can still offer 5G access via the 5G access agreement

5G Network Scheme In Limbo
Photo by Jeremy Bezanger / Unsplash

Malaysia's national 5G network scheme is in disarray after Maxis Communications and U Mobile pulled out at the last minute, saying they will not invest in the state-backed wholesaler, DNB.

Meanwhile, Telekom Malaysia and YTL Communications have obtained approval from its boards and ready to sign an agreement to take up shares in the Single Wholesale Network (SWN).

Initially, 70% stake will share equally among the 6 telcos but the Share Subscription Agreement (SSAs) will have to revise again as the two telcos (U Mobile and Maxis) declined to proceed with the equity deal.

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"We might see three scenarios for the redistribution of shares, the four telcos will be given larger shares, 17.5% each (previously: 12%), private telco companies to take up the remaining shares, and/or, the Government increase its stake, but not at the level of a majority shareholding in DNB. The deal is expected to conclude by end of September 2022," says MIDF.

5G Access Agreement

Telcos that did not want to take up an equity stake in DNB can still offer 5G access via the 5G access agreement.

U Mobile and Maxis are still committed to offering 5G services and continue to negotiate with DNB to get a 5G Access Agreement in place.

On the other hand, DNB need to offer the same services on the same terms and prices, using the same systems and processes to the same timescales (non-discriminatory basis) to all the telcos via the 5G access agreement.

For MIDF, the implementation of the SWN model would increase the pressure on telcos to adjust shifting dynamics in an already competitive business.

The companies may be required to pay upfront wholesale fees to DNB which is dependent on the revised equity stakes that will be announced soon.

"However, we continue to believe that the SWN model is more efficient for accelerating 5G network rollout and deployment for the country, as the continuation of SWN could avoid risks such as compensation costs, prolonged delays in 5G network rollout, negative impact on Foreign Direct Investment into Malaysia, and a widening urban-rural digital divide to the sector, government, and nation," says MIDF.