Deadline On 5G Offer Could Be Extended To July

With the 5G deadline offered to telecommunication companies in the country drawing closer, Finance Minister Tengku Zafrul said the government is willing to consider fiscal incentives to assist telcos’ transition to 5G, to mitigate any short-term commercial consequences of providing 5G services to their customers.

Tengku Datuk Seri Zafrul Abdul Aziz added the availability and adoption of 5G contribute to the nation’s digital ambitions while ensuring connectivity as a basic right for Malaysians.

“DNB and the telcos have been asked to meet the June 30 deadline. The majority of the process should be completed by then. If an extension is required, the process may be extended until early July, but no later than that “It is now moving in the right direction, toward 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 said. 

The Minister remarked that they are now in the second stage, which is the distribution of a Term Sheet for the Telcos’ equity participation. This Term Sheet summarises the key terms under which DNB will be governed as an entity with both the Ministry of Finance and telcos as shareholders. DNB and interested telcos will then work on signing the Term Sheet as soon as possible,” he said.

On the equity hold in DNB, Tengku Zafrul said the equity stakes offered to telcos that are not taken up will be re-distributed to those who wish to hold equity in DNB.

“So, the telcos may be able to obtain a larger stake than the 7.78 percent initially offered to them. However, no investor may own more than 20 percent of DNB; or 25 percent in the event of a merger among DNB equity stakeholders.

“The MoF will hold 30 percent of DNB. However, if only a few telcos invest in DNB, the ministry will take up any remaining shares, based on the maximum telco shareholding of 20 to 25 percent,” he said.

Tengku Zafrul said the majority of DNB’s financing will continue to be provided by private sector loans and debt instruments and any funds raised through the issuance of new shares for DNB’s 70 per cent equity will reduce the need for private sector financing, but will not entirely replace it.

“The government believes that DNB’s value proposition serves the telcos’ long-term interests because it requires no heavy capital expenditure (capex) investment while ensuring higher consumption and thus improved average revenue per user (arpu) and overall revenue in the medium and long term,” he said.

“All 5G spectrum will be available only through DNB. The entity is able to obtain financing to fund the network rollout because 5G services will undoubtedly be in demand in the country. I am aware that DNB has discussed financing with various banks,” he said.

Despite receiving various interest in DNB from both domestic and foreign investors, Tengku Zafrul said that Malaysian telcos should be prioritised over any foreign interest however if the parties do not take up the offer then MOF would need to relook at its position.

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