Report: Deal between telcos and DNB for 5G rollout set to be finalised by early July

KUALA LUMPUR, June 29 — Industry sources today claimed that Malaysia’s top telecommunication corporations have agreed on shared ownership of Digital Nasional Berhad (DNB).

Ahead of the June 30 deadline for telcos to sign up for 5G network contracts and shares in DNB, a report by Singaporean newspaper The Straits Times (ST) said that a non-binding term sheet has been agreed on by six telecommunication operators and is set to be put to paper early next month.

“We are just doing due diligence, which should be completed within a fortnight,” a source told ST on condition of anonymity due to non-disclosure agreements signed when negotiations began earlier this month.

DNB was set up by the government to quickly deploy Malaysia’s 5G network amid concerns that the mobile cellular market, now dominated by the big four telco companies — Celcom, DiGi, Maxis and U Mobile — or CDMU, was lagging behind other countries in introducing the fifth generation technology standard which started rolling out globally in 2019.

As a comparison, other South-east Asian countries have already started deploying 5G in their countries, with it already being widely available in Singapore and Thailand, and the Philippines, Indonesia and Vietnam ahead of Malaysia in their deployment timelines.

The report added that the agreement will include a price review that would be overseen by the Malaysian Communications and Multimedia Commission (MCMC) every three years.

It also indicated that wholesale pricing would be discounted until DNB achieves 80 per cent of nationwide coverage, which is estimated to happen by 2024.

Putrajaya has been in constant negotiations with telcos in the country over the rollout of 5G, with CDMU constantly pushing back for more favourable terms — advocating for a dual wholesale network (DWN) model instead of the government’s single wholesale network (SWN) — which they claim would provide better optimising availability and pricing of 5G.

Thus far, only two mobile operators and the state-controlled Telekom Malaysia have so far supported the SWN model and signed up to trials and equity stakes in DNB.

CDMU claim that DNB’s wholesale offering, which is set at RM30,000 monthly for each gigabit per second (Gbps) of capacity, with a volume discount rate of RM22,000 beyond the first 1,2000Gbps is expensive, especially when agreements are to be locked in for 10 years, when the cost of mobile data has shrunk by 97 per cent since 4G was launched in 2013.

But Putrajaya has insisted that the cost per gigabyte of data will come up to just 20 sen, less than half of what is currently being incurred.

CDMU’s resistance led to further delays before Putrajaya eventually gave in in March by offering telcos a 70 per cent stake in DNB. A move that is said to ensure they have a say in the 5G rollout — and also hedges against being overcharged for wholesale capacity.

But out of nine telcos, only six, including CDMU, will take up equal shares in DNB, sources said.

On May 23, Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz indicated to two of the big four telco firms that the government intends to stick to its June 30 deadline for them to sign up for 5G network contracts and shares in the state 5G agency, rejecting a move by the companies to demand a controlling stake in Digital Nasional Berhad (DNB).

On June 16, Zafrul told ST that an extension to “early July, but no later than that” was possible, if required, to tie up loose ends.

But a term sheet laying out “the main terms of governance and the equity issues” will be ready this month in line with “our primary goal of providing 5G services to as many users and businesses as possible in the shortest amount of time, allowing Malaysia to catch up with its regional peers”, he told ST.

“Indeed, the interests of Malaysia and its people must take precedence over the telcos’ narrow commercial interests,” Zafrul said, claiming the implementation of the super-fast next generation network will provide an RM650 billion boost to the economy and create 750,000 high-value jobs by 2030.