Should the govt hand DNB over to the telcos? Here’s what an ex-Economic Action Council member says

Malay Mail
Malay Mail

KUALA LUMPUR, April 29 — Tan Sri Tong Kooi Ong, owner of business paper The Edge and a former member of the Economic Action Council (EAC), has urged the Anwar administration to keep its national 5G roll-out plan under state control.

In a lengthy opinion piece published in his own paper, Tong said Prime Minister Datuk Seri Anwar Ibrahim’s unity government should not cave into pressure from private telecommunication firms (telcos) that want to squeeze users by hoarding the technology to themselves.

Tong reminded critics of Digitial Nasional Berhad that the single wholesale network (SWN) model was proposed because of the telcos’ poor track record in rolling out 4G.

The former EAC council member, who was directly involved in the discussions to adopt the SWN approach, claimed local telcos had and continue to overcharge consumers despite offering “low-quality services”.

He claimed these companies preferred to keep most of the profits for shareholders, instead of reinvesting it into better services, which led to lagging innovation.

“The whole reason that DNB was even contemplated as the SWN provider of 5G infrastructure in the first place was that the telcos were charging the rakyat high prices, offering low-quality services, falling behind in innovation and slow in rolling out 5G,” he wrote.

“Consider just Celcom, Digi, Maxis and U Mobile. They raked in RM100 billion in earnings before interest, taxes, depreciation and amortisation (Ebitda) over the last 10 years and RM42 billion in after-tax profit as well as paid themselves dividends of RM44 billion, which even exceeded their profits (by incurring more debts), and correspondingly under-invested .

“Total capital investments of Celcom, Digi and Maxis over the last decade was RM32 billion, or just 14 per cent of revenue, in comparison to the regional average of 20 to 25 per cent,” Tong added.

The letter was published ahead of Wednesday’s Cabinet meeting, when the government is expected to decide on DNB’s future.

DNB, wholly owned by the Ministry of Finance, is the sole authorised entity to deploy 5G, but rumours have swirled that the Anwar administration could be looking at a second network provider amid allegations that the SWN model would give DNB monopoly over the high-speed internet technology that politicians touted as an economic gamechanger.

A dual wholesale network is ostensibly intended as a buffer should DNB fails, something that detractors have used to argue against the SWN model.

But Tong argued that not all “monopolies are bad”, saying that in the case of DNB, the firm acts as the guardian to a technology that the government intends as a utility meant to help boost people’s livelihoods.

This is especially important to rural areas, he added, where private telcos have failed to give adequate internet coverage to some of the most marginalised communities, like the interiors of Sabah, Sarawak or even in the peninsula.

“First, this is 100 per cent government owned. It is not a private monopoly. There is no economic rent-seeking,” the businessman wrote.

“And not all monopolies are bad. There are many ‘natural monopolies’, such as the distribution of water and electricity, most public roads, the police force and the Army. This is particularly true of necessities of life.

“And as I have argued before, the internet is now a necessity, no longer a ‘nice-to-have’. Every citizen has the right to have access to the internet, just like electricity and roads.”

DNB became a contentious election issue following allegations of monopoly levelled against it, although most of the pressure was believed to have come from private telcos and the tycoons behind them instead of consumers.

As a result, Anwar vowed to “review” his predecessor’s 5G plans upon taking office, fuelling rumours that DNB could eventually be dissolved. To date, the prime minister has not indicated that it would happen.

Tong argued that there’s no reason to dismantle DNB because he feels the firm has delivered, citing cheap 5G data provided by YTL Communications through YES and Telekom Malaysia with Unifi.

“Because it is an SWN — where costs are minimised, with only one shared infrastructure (like a shared highway for all cars), and, correspondingly, it gains from economies of scale in usage — it is able to sell the 5G to the telcos at only 13 sen per GB. This is far less than the existing cost of 4G by the telcos at some 50 sen per GB,” he wrote.

“Accordingly, Malaysians will benefit by paying far less, at RM1 per GB of 5G, versus the cost of RM2 per GB of 4G now — and for a far better quality of service. This is a fact, and the data proves it,” he added.

“This is not merely a promise but a fact, as evidenced by telcos that have started offering 5G.”

Tong was appointed as an EAC member in 2020 alongside several large business owners by the government of then prime minister Tan Sri Muhyiddin Yassin. He was also a member of the Digital Council that had proposed the SWN model.

His defence of DNB had prompted accusations that he has business interests in the government’s 5G plans, claims that Tong has repeatedly denied.