Ambank Research expects that the Share Subscription Agreement (SSA) with Digital Nasional Berhad (DNB) and new equity structure will be finalised and subscribed to by the end of October to speed up implementation of the country’s 5G network nationwide.
The research house said today (Oct 24) that it is in the view that the second 5G network will be launched by early 2024 depending on DNB’s coverage of populated area (CoPA) that is slated to achieve 80% target by year end.
As of Sept 30, CoPA for DNB’s 5G network has reached 70.2% with 5,873 5G sites.
It said that to achieve the target, all the telecommunication providers (telco) must hold an equity stake in Entity A. When that is fulfilled, telco can move to Entity B, for those who did not have a stake in Entity A. The government, in turn, will release its stake in DNB to private entities.
“We think entity A will be comprised of Telekom Malaysia Bhd (TM), CelcomDigi Bhd and YTL Communication Sdn Bhd, which were the first telcos to agree to subscribe to the equity stake in DNB previously.
“Meanwhile, Entity B comprises Maxis Bhd and U Mobile Sdn Bhd who previously rejected DNB shareholding participation,” it said in a note.
AmBank Research said these players potentially have equal substantive stakes in DNB, assuming DNB is 100% owned by them.
The equity stake would rise to 20% with a substantive value of RM300 million compared to the previously proposed 65% telcos’ shareholding, which implied an average of RM210 million for a 14% stake each.
With fibre prices being lowered following the revision of mandatory standard access pricing (MSAP), which regulates wholesale pricing for high-speed broadband, AmBank Research expects broadband prices of other telcos to follow suit after TM’s revision of reference access offer (RAO) for wholesale charges and reduction in its own Unifi retail prices.
“We think that Maxis will reach an agreement with TM’s RAO and revise home fibre prices by the end of this month to maintain competitiveness with the dominant fibre optic operator’s new broadband prices,” it said.
The research house also believes that wholesale price ceiling for the second 5G network should be on par with DNB’s 5G network, which is currently set at 13 sen per gigabyte (GB).
Ambank Research also elaborates good news from the announcement in the tabling of Budget 2024 last Oct 13.
The government, it said, had allocated RM60 million to implement the 5G Cyber Security Testing Framework and 5G Technology Local Expertise to counter rising cyber threats, especially data theft.
“We view this positively as better cyber security will increase 5G adoption and digitalisation by enterprises and consumers.
“Besides that, exemption on the 8% service tax to telco products as part of the government’s initiative to lower 5G access costs and overall product prices could accelerate the recruitment of new subscribers,” it said.
