DNB denies lack of transparency hampering 5G rollout, says award of equipment contract rigorous

KUALA LUMPUR, April 20 — Malaysia’s single wholesale 5G network operator Digital Nasional Bhd (DNB) today denied allegations that it lacked clarity in its internal operations, particularly the award of the contract to Ericsson to develop the 5G infrastructure — estimated to have cost close to RM5 billion — and other arrangements with third parties over software procurement.

In a statement, DNB said it strongly denies these allegations and rejects the insinuation of any impropriety in the company’s governance and procurement practices.

“DNB’s tender and procurement processes are structured according to the strictest governance standards and best practices.

“DNB has always been open and transparent in its awarding of tenders and contracts — this matter has been addressed in detail various times in Parliament and reported in the media, repeatedly disproving the allegations,” said the statement.

The statement was in response to claims made by Singapore-based CNA on Malaysia’s 5G rollout stalemate in a report published yesterday, that was then picked up by local media outlets.

The report highlighted serious concerns affecting Malaysia’s 5G rollout. It alleged that after telcos signed a share subscription agreement to take up a collective 70 per cent stake in DNB last year, the telcos and DNB have failed to reach an agreement due to several issues.

The report also questioned the establishment of a second 5G network which was promised after DNB achieved its 80 per cent 5G population coverage target almost four months ago.

DNB added that it has always been open and transparent in its awarding of tenders and contracts, where the matter has been addressed in detail various times in Parliament and reported in the media, repeatedly disproving the allegations.

“The awarding of the 5G network equipment contract involved a rigorous evaluation process, with Ericsson obtaining the highest score across all prerequisites.

“The tender process was structured by an independent global professional services firm, and involved some 50 local and international experts from across 10 countries with 5G network rollout experience,” explained DNB, adding that the process has also been reviewed by multiple parties, including reviews of the 5G network policy by the Malaysian Cabinet in 2022 and last year.

DNB added that the process involving the Share Subscription Agreements (SSA) signed with the 5 Mobile Network Operators (MNOs) is ongoing.

“We strongly deny the claims made otherwise but are unable to comment in specific terms due to confidentiality restrictions.

“Given DNB’s position as a public utility serving the public interest, it is critical for published reports to be verified and based on accurate information.

“DNB remains focused on continuing to deliver one of the best-performing and most reliable 5G networks in the world on an accelerated basis and within cost and on increasing 5G adoption across industries, enterprises and the public, to help accelerate Malaysia’s digital transformation,” said DNB.

Yesterday, the CNA report called to attention that the complex government-sponsored settlement agreement reached between DNB and the five major telcos has broken down.

The report said each telco injected RM233 million into the country’s sole 5G network upon the signing of the SSA and the deal was pending due diligence and approvals from relevant authorities, financiers and certain vendors.

It also disclosed that both sides have yet to agree on the so-called condition precedents (CP), which is legal parlance for events that must take place before a contract can come into effect.

This included the appointment of directors who will represent the telcos on DNB’s board and the completion of three confidential audits on the state-owned 5G network by external experts.

On the same day, Maxis Bhd issued a statement saying it is supportive of the government’s rollout of the country’s second 5G network, dismissing claims that economic factors may hinder the development of an independent network.

The leading telecommunications company expressed its readiness to develop another fifth generation of wireless cellular network, or widely known as 5G, having recently showcased the capabilities of a 5G-advanced (5.5G) network with government support.

DNB was established as a 5G single wholesale network operating on a cost recovery model that relies on telco’s 5G access payments to fund its operations.

Previously, the government and DNB have iterated that no public funds will be used to fund the 5G network except for the initial RM500 million by MOF as a start-up investment.

However, in December last year, Communications Minister Fahmi Fadzil was reported to have said that the entire 5G network was borne out of public funds as the reason why telcos shouldn’t charge extra for 5G services.