The 5G saga in Malaysia did not come to an agreement without twist and turns even until the last minute. When the official statetment was released stating that 4 telco’s namely TM, Digi, Celcom and YTL who agreed to take up stake in the Ministry of Finance incorporate Digital Nasional Berhad, Minister Tengku Zafrul two days later announced Maxis and U Mobile have also joined the coalition.
So how tight can the agreement be, when the run up to getting all network operators to agree to the terms and pave the way for DNB’s single wholesale network 5G roll out to commence has been no less tumultous? Looking at Celcom parent company Axiata’s Bursa filing detailing the terms of the agreementl, the clauses appear to be designed to please the operators rather than DNB.
While there are 8 clauses for the mobile operator to terminate the agreement, DNB has only one that is with regards to payment for the susbsciption service.
The completion of the Share Subscription Agreement is scheudled to be completed before 30th October, however with the eletion now set in motioin, will a change in government send everyone back to the drawing board is another matter. However, focusing on what has been agreed upon by the Sabri administration., comes with terms and conditions at a glance seems to be favouring the telecommunication opereators. (we assume the terms listed by Axiata for Celcom is similar with Digi, TM, YTL, Maxis and U Mobile)
To execute the SSA, DNB will have to ensure a myriad of items listed in the pre conditions of the agreement including changes on the licence held by DNB by MCMC, ammendment of its Board Charter with written approval from MCMC, written consent from DNB lenders, written consent or waiver from major DNB vendors, written confirmation from MCMC that no merger approval is required for the Transaction under the SSA and the other share subscription agreements
Telcos have also asked DNB for a letter from MoF Inc agreeing to purchase back the shares in DNB if the entity is no longer the single wholesale provider of 5G services in Malaysia or existing licesees are en titled to re-deploy existing spectrum to provide 5G services.
Faling if any of the conditions do not for some reason collapse, parties can terminate the SSA, if there is a breach by DNB of any of the conditions and undertakings agreed by prior to completion. Additionaly, the SSA can be terminated if there is a breach of warranties resulting in an individual claim or multiple claims on an aggregate basis that is equal to or more than an agreed threshold in terms of shareholding.
Also of MCMC (or any government agency with the relevant authority) determines that DNB will no longer be the single wholesale provider of 5G services in Malaysia or any MCMC licensee is entitled to re-deploy its existing spectrum to provide 5G services or is otherwise provided with or acquires spectrum to provide 5G services, whether on a wholesale or retail basis; Or if there is a change in the law that prohibits DNB from imposing a target capacity, volume commitment and/or bandwidth under the Access Agreement to all Access Seekers; and requiring all Access Seekers to subscribe to the national 5G wholesale network product to gain access to other services.
DNB does not receive confirmation in writing from the Ministry of Finance within a period of twelve months from the date of the SSA that the MoF has exempted DNB from corporate income tax for a period of not less than five years and confirmation from MOF that the equity interest in DNB is deductible from its chargeable income at a prescribed rate per annum.
As reason for DNB to terminate the agreement is only if its customers do not pay the Subscription Price on the completion
date.!
