With the awarding of the national 5G rollout by Digital Nasional Berhad to Ericsson, there has been numerous inquiries on how the process was conducted and how the Swedish Telecommunication won the RM 11 billion project.
The grand aspiration for Malaysia’s 5G adoption will start immediately and is expected to cover Kuala Lumpur, Putrajaya and Cyberjaya by the end of the year according to DNB, It has already started nationwide engagement with industry participants including the Mobile Network Operators, tower and fibre owners.
On the awarding, DNB justifies that the design, build and maintenance of the Malaysian 5G Network will be managed by Ericsson and is estimated to cost RM11billion around RM700million lower than the total cost of ownership of the next closest bid. Ericsson’s network equipment, deployment services, and ongoing maintenance and network management cost of RM4billion was the lowest and the balance of approximately RM7 billion will cover network infrastructure costs from other parties comprising primarily tower rental and fibre leasing over a 10-year period.
As for the financing of network equipment will be sourced from foreign and domestic financial institutions which Ericsson has undertaken to arrange as part of the agreement to supply, deliver and manage the entire 5G network.
DNB claims it will securitise future cashflows from its wholesale business with MNOs via Sukuk programmes to finance its other network operating expenditure and meet its obligations to repay financiers when it becomes due. Accordingly, it reinstates that there will be no government funding required for the 5G network rollout. Moreover, more than 60% of the spend on the network infrastructure is said to directly benefit bumiputera contractors in the telecommunications industry.
How Was The tender Process?
The tender process was structured by an independent professional services firm, Ernst & Young Consulting, according to global standards and involved four (4) panels, comprising some 50 local and international experts from across 10 countries with current 5G network rollout experience.
It began with the initial evaluation of 14 Network Equipment Providers (NEPs), after which, 8 were shortlisted and invited to bid for the tender. The criteria evaluated when shortlisting the NEPs were: Proven credentials in successful 5G deployment and execution of end-to-end technology solutions; Availability of enhanced security to safeguard users and platforms; Established Malaysian presence and ecosystem and a sound understanding of the business environment including existing network of vendors; Locally based resources for immediate deployment; and Effective plan for the transfer of knowledge to be acquired by domestic affiliates. Of the eight (8) invited, only four (4) submitted their bids.
From there, the tender evaluation team comprised of internal and external independent industry experts and experienced professionals, deliberated on the results with the Board Tender Committee and the Board of DNB. Strictest standards of governance were adopted throughout the tender process as advised and facilitated by EY Consulting.
The tender requirements were based on criteria identified and refined through a rigorous process with industry feedback on the requirements of the 5G network and shared with all invited NEPs.
Based on the evaluation, Ericsson came in top in all three key components of the tender evaluation criteria on Technical: covering overall 5G technology capabilities, 5G deployment capabilities, integration approach, cyber and network security, and operations and maintenance Commercial: covering financing proposal and total cost of ownership. Socioeconomic: covering local development and socio-economic impact
