Bulk Of Jendela Phase 1 Met, But 5G Hampered By Site Delays

With most of Phase 1 targets of the National Digital Network (Jendela) progress being met, analysts at RHB Investment Bank Bhd (RHB Research) saw that much of the 5G coverage was hampered by site delays.

At the third quarter 2022 (3Q22) Jendela briefing, the regulator highlighted that the number of fibre premises passed has reached 7.44 million –- a shade below the 7.5 million end-2022 target under Phase 1 –- while average mobile broadband speed of 52.48Mbps continues to be ahead of the 35Mbps targeted.

“The 4G population coverage aim of 96.9 per cent may be difficult to meet considering the remote site locations, with 2Q22 coverage at 95.82 per cent (3Q22’s number will only be available by month’s end),” RHB Research said.

“Meanwhile, the 5G rollout by Digital Nasional (DNB) has covered 33.2 per cent of the population (3Q22) with 1,915 sites completed. However, this number only makes up 54 per cent of the end-2022 target of 3,518 sites (37.9 per cent coverage) – rollout has been hampered by delays in site approvals.

“Other updates include that the Mandatory Standard on Access Pricing (MSAP) public inquiry (PI) has been extended to January 2023. The regulator extended the deadline for industry feedback on the access pricing review to January 3, 2023 from November 21, 2022 – likely in response to the impending polls.”

The extension will allow more time for industry consultations, in our view, more specifically for Telekom Malaysia Bhd (TM) to better justify the case for broadband access prices (for the 2023-2025 regulatory period) to reflect the higher cost of access, according to the Borneo Post.

The latter should take into account inflationary pressures and significant fibre investments to improve coverage, connectivity, and quality over the past three years.

Under the PI issued on October 5, the regulator had proposed a 41 to 52 per cent reduction in high-speed broadband access (HSBA) prices for Layers 2 and 3 vs current prices (2018-2022).

“While this looks to be negative for TM, and could renew concerns over retail fixed broadband price competition, we note that final access prices could still be higher than originally proposed,” RHB Research said.

“In the previous MSAP review in 2017, finalised HSBA prices were two to four times higher than the regulatory proposals.”

The regulator said it is open to further mobile consolidations and has engaged third-party consultants to study the matter.

“With DNB as the single 5G wholesale network or SWN provider, mobile network operators or MNOs would eventually transform into mobile virtual network operators or MVNOs in the long run as competition shifts away from networks to products and services.

“The current regulatory prohibition on the use of existing spectrum for 5G services has also effectively truncated the industry’s spectrum ownership and roadmap, which could catalyse further mergers and acquisitions in our view.”

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