Does DNB Still Need RM16.5 Billion For 5G Rollout?

With the change from the Single Wholesale Network model to the now Dual Network Model, Communication and Digital Minister Fahmi Fadzil when asked by BusinessToday about the investment structure, said the investment amount as proposed since 2022 will remain the same as RM16.5 billion.

This was mentioned in November 2022 by Tengku Zafrul the Finance Minister during that time “The 5G network development cost is RM16.5 billion over 10 years, without any government financing or guarantee other than equity injection worth RM500 million to start the operation of the DNB company.”

Fahmi who spoke to the media at the sidelines of the Ericsson 5G showcase recently, also explained that he was the adoption level for 5G is currently low and that a major announcement will be made on October 13 presumably at the Budget 2024 presentation with possible discounts and rebates to accelerate 5G adoption.

However, delving back into the investment matter, it was ascertained that the 5G rollout encompassing full nationwide coverage would cost RM16 billion (even though there is no direct funding as Digital Nasional Berhad the sole spectrum provider will be raising funds for the project, with the government backing) so in theory there should be no additional investment with the switch to Dual Wholesale Network model. Thus, the telcos that will be playing the role of the second operator for 5G will be sharing the investment funds which would mean the overall investment for the rollout will remain the same as well, right, or will the telcos invest as well, which then the whole pricing mechanism will change?

These are some of the pertinent questions the Communication and Digital Ministry together with the Ministry of Finance need to clarify. The other aspect is the wholesale price, during Parliament sitting on May 2023 Communications and Digital Ministry Deputy Minister Teo Nie Ching told Dewan Rakyat that one of the conditions determined by the Cabinet is that the tariff price offered by Entity B for the second network cannot exceed that of the current tariff [under DNB].”

Teo noted that DNB’s current wholesale price offered to telecommunication companies (telcos) is RM30,000 per Gbps (gigabit per second) a month — or 13 sen per GB (gigabyte).

“The condition we will set for the second entity is that [their wholesale] price can be lower than the current price or the same, but cannot be higher. That is why we believe that the second network will create competition between the two entities, and because of that, consumers will be able to benefit,” Teo said.

With the whole 5G infrastructure cost borne by DNB and publically announced the wholesale cost to be lower than even 4G, why are the telcos charging extra to ‘boost’?

As of publishing this article, DNB has yet to have a Chief Executive Officer but was mentioned by Fahmi it would be announced on August 30 (it has been more than a month now!), all the mobile operators have yet to sign the new equity share agreement with DNB.

Malaysia’s 5G rollout has been plagued with controversy since the Government was convinced the SWN model was the right method for the country despite its proven failure and near-zero adoption by any other country.

All that is left now is for October 13, when all telcos would have signed the new agreement, DNB gets a new CEO and Prime Minister Anwar announces new discounts for 5G adoption.

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