KUALA LUMPUR – The Finance Ministry will still hold the golden share of Digital Nasional Bhd (DNB) despite telecommunications companies ending a months-long deadlock in buying equity stakes in the 5G special purpose vehicle, an industry insider said.
The source who requested anonymity due to the sensitivity of the issue, told The Vibes that this means the ministry will still steer the outfit as the telcos will only be able to individually hold up to a maximum of 12% equity in DNB.
The telcos will be cementing their presence as “serious players” in the nation’s 5G roll-out by finalising documentation such as the Access Request Application by July 8, before inking the Wholesale Access Agreement soon after.
The development came following the government’s move to offer a short extension on its June 30 deadline for the mobile network operators to jump on the 5G bandwagon.
However, it was said that the telcos did not necessarily have to buy stakes in DNB in order to participate in the 5G roll-out, despite signing the Wholesale Access Agreement.
The informant also said all six companies would not be collectively holding more than 70% stake in DNB, in line with the government’s earlier offer.
“With the ministry holding the golden share, DNB’s implementation of 5G across the country will not be hindered by individual interests of the telcos,” said the source.
“The telcos will still not be able to dictate the pace of the roll-out as well as other things such as vendors assigned to build the related infrastructure.”
Previously, the country’s four major telcos – Celcom, DiGi, Maxis, and U Mobile, collectively known in the industry by the CDMU moniker – had resisted the implementation of the national 5G service by DNB.
Instead, they proposed their own plan, which was seen as more of an act of self-preservation.
When the government persisted, they grudgingly accepted it, but soon coalesced into the CDMU we know now.
They took a unified stand on everything related to 5G and DNB.
The source noted that CDMU can collectively own a maximum of 48% equity in DNB should they decide to buy stakes, but they will not be treated as majority shareholders that can dictate the national 5G roll-out plan.
Yesterday, Communications and Multimedia Minister Tan Sri Annuar Musa made the announcement of the telcos’ entry into DNB.
This comes after industry insiders told Singapore’s Straits Times that Malaysia’s telco giants have agreed on the shared ownership of DNB.
On Wednesday, the industry insider said the companies are currently conducting due diligence on the deal, which is expected to be reached within a fortnight.
DNB has been tasked to build the nation’s infrastructure for 5G, which is the next exciting stage of mobile telecommunications and telcos shall subscribe for access and subsequently offer products and services to consumers.
The company aims to achieve 80% coverage of populated areas by 2024.
Last week, Finance Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz insisted the 5G network roll-out is ultimately a matter of national interest meant to uplift Malaysians and should not be considered merely from the commercial needs of the telcos.
Tengku Zafrul told Straits Times that the 5G network will boost the economy by RM650 billion and create 750,000 high-value jobs between now and 2030.
He also stated that priority will be given to local telcos to hold equity in DNB, despite interest from other foreign and domestic investors.
However, the senator explained that no investor may own more than 20% of DNB – or 25% in the event of a merger among equity stakeholders.
The Finance Ministry (MoF) will hold 30% of DNB.
However, if only a few telcos invest in DNB, MoF will take up any remaining shares, based on the maximum telcos’ shareholding of 20% to 25%.
On Wednesday, the Malaysian Communications and Multimedia Commission announced approval for the proposed merger between Digi and Celcom, which are Malaysia’s second and third largest mobile service operators to date.
The merger will result in the formation of the country’s largest mobile service operator.
In relation to the Digi-Celcom merger and their stakes in DNB, the source said the percentage of equity allowed for both companies are still unclear as the two had yet to finalise the matter.
However, it is likely that the two telcos would be treated as a single entity with regard to the 12% stake for each company, the source said. – The Vibes, July 1, 2022
