BMI, a Fitch Solutions company, has attached three reasons to the five telecommunication companies, especially Maxis Bhd’s, capitulation to join Digital Nasional Bhd.
According to the research firm, the government managed to win them over because the five found that it was cost-effective to pool their investments into a shared platform that allows for equal access rights; their ability to influence DNB’s commercial decision making process due to the equity interests; and lastly Maxis’ reluctant agreement to join rivals Telekom Malaysia, CelcomDigi, UMobile and YTL in taking a position in DNB suggests that it sees no value in continuing to lobby the government to scrap the DNB scheme.
“It also suggests that Maxis either sees little value in joining the government’s proposed second 5G network or that such a business would be commercially viable given its rivals’ backing of the original platform,” BMI Industry Research head of technology & telecoms research Andrew Kitson said in a report today.
“Rising inflation, which is likely to be weighing on their heavily leveraged existing mobile businesses, could well have forced the decision on all five operators.
Secondly, the new government’s moves to open up the equity of the DNB to the operators means that they now have the ability to influence the DNB’s commercial decision-making processes, including vendor selection, infrastructure deployment timetables and the setting of retail and wholesale tariffs,” he said in the note.
Under the original plans for the DNB, a government-appointed board would have had full oversight of the business’ commercial strategy, with the operators taking passive tenant-like roles with little to no influence.
Kitson added the move made by participating telcos signalled that there is now little scope for the proposed second 5G platform to secure usage agreements from the five established operators, as this would amount to both a conflict of interest and a doubling of investment.
“The second 5G platform could be repositioned as a carrier-neutral network to which smaller players and virtual service providers could sign up; these players would have fewer concerns about being able to set rollout goals or control pricing, and it could be beneficial for rural and low-income consumers as well as enterprises seeking low-cost, low-volume connectivity for specialised purposes such as smart metering and remote sensors,” he said.
BMI forecasts Malaysia 5G connections to reach 33.8 million by 2032, representing 75.3 per cent of the total mobile user base.
Last Friday, Communications and Digital minister Fahmi Fadzil announced that the five telcos had agreed to take up equity interest in DNB and were in the process of subscribing to shares in the special purpose vehicle (SPV) for 5G rollout.
However, industry observers told the New Straits Times that the news had raised more questions than answers as little information was revealed on the development.
The announcement also came less than three months after CelcomDigi and TM backed out of the deal to take up stakes in DNB after the minister’s announcement of a dual wholesale 5G network.
