[UPDATED] 5G: telcos could own up to 70% stake in DNB, says Zafrul

PUTRAJAYA – The government has decided to implement a single wholesale network (SWN) for the national 5G broadband roll out, with mobile network operators (MNOs) being given the opportunity to own up to 70% stake in Digital Nasional Bhd (DNB).

Finance Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz said DNB has been instructed to keep the wholesale price of the 5G network to below 20 sen per gigabyte (GB).

“This is expected to keep the price of 5G at a reasonable rate, and encourage usage among consumers and industries, and reduce cost of living and doing business.”

Tengku Zafrul said although the cabinet had decided on the 5G network rollout under DNB – a Finance Ministry-owned special purpose vehicle – the country’s MNOs will be given the option to own up to 70% stake in DNB.

He added that the decision is based on the supply needs of the country and based on a cost recovery model.

“With the new ownership structure, the government will hold 30% equity in DNB that will be monitored by the Communications and Multimedia Ministry, which is also responsible for the industry through MCMC (Malaysian Communications and Multimedia Commission).

“The Finance Ministry will continue to monitor DNB in terms of administration and as the 30% stakeholder.”

DNB said in a statement that it is pleased the government has reaffirmed that the current “cost-recovery, supply-led” SWN model being implemented is best suited to accelerating deployment of the national 5G network.

“This is consistent with the country’s digital economy aspirations and positions Malaysia as an attractive destination for the global investor. We look forward to engaging with the telcos to discuss and agree on all aspects related to the proposed equity participation in DNB.”

DNB said it aims to achieve 80% coverage of populated areas by 2024, and will be extending its ongoing commercial pilot to June 30. 

The commercial pilot – which commenced on December 15 and is due to end on March 31 – will allow telcos to access the network without charge and provide 5G experiences to their end users.

Govt targets 80% national coverage in three years: Annuar

Also present was Communications and Multimedia Minister Datuk Seri Annuar Musa, who said the decision was made following a series of engagements with the stakeholders, including parliamentarians.

Annuar said some of the factors behind the decision included the need to achieve 80% national coverage for 5G within the span of three years.

He also said the rollout must be expedited to ensure the country remains competitive with its regional neighbours as it was a necessity for future investors.

“I wish to explain that the view that DNB is monopolising (the rollout) is no longer raised as the government is giving the opportunity for 70% ownership of DNB shares to be bought by the (MNO) companies,” Annuar said.

“This makes DNB a joint-effort between the government and the private sector.”

Annuar said the government had initially wanted to offer MNO’s opportunity to buy stakes in DNB by 2024, but the process would be expedited. He added that the process could begin as early as June this year.

The telcos had opposed the proposed SWN model, citing concerns over competition, innovation, and monopolisation, leading to them forming a consortium that wants to operate a secondary 5G network.

However, Annuar said the government’s current decision on SWN with stakes for MNOs was well-received by the telcos.

The announcement today marks the end of the months-long impasse on whether DNB will set up the nation’s 5G infrastructure, or whether the country will see a dual wholesale network (DWN) proposed by the telcos.

On February 18, Celcom, Digi, Maxis and U Mobile issued a joint statement saying they were ready to invest and see the DWN model as a “feasible option” that leverages the capabilities of mobile network operators (MNOs) and their existing resources.

In December, service providers YES and Unifi Mobile took up DNB’s offer for 5G services as part of a pilot project in Kuala Lumpur, Cyberjaya, and Putrajaya, which began in mid-December.

5G rollout attracts polarising views from stakeholders, politicians

The issue has also garnered polarising views from stakeholders and politicians.

Earlier this month, Lembah Pantai MP Fahmi Fadzil called for a probe into DNB’s 5G network deal with Swedish telecommunications firm Ericsson over possible corruption.

This, after it was revealed through media reports that the United States Department of Justice is investigating Ericsson over years of alleged corruption in several countries.

Last week, Bangi MP Ong Kian Ming lambasted the telcos for placing profits above the welfare of the customers, adding that they are unlikely to roll out the technology rapidly.

He added that the telcos were not willing to engage the public on the issues that were raised.

Ong said although the SWN offered by DNB has more risks, the roll-out would be faster, especially to the rural and underserved areas, while DNB is also not operating on a demand-based model, unlike the telcos’ approach to providing 4G services.

His remarks echo a United Nations adviser’s belief that Malaysia will be better off with a 5G broadband spectrum provided by an SWN, as other models for its roll-out would be “confusing” for stakeholders and consumers in the country.

Brett Haan, an adviser to the United Nations and Brazil’s Economics Ministry on 5G strategy and policy, said although mobile network operators have raised several concerns, including the domino effect of failures due to a single source, the private telecommunications companies can also view the model as a basic utility for the people. – The Vibes, March 16, 2022