Maxis and CelcomDigi Berhad have recently announced that they have entered into a conditional share subscription agreement with MoF Inc. and DNB on December 1st, 2023. The agreement involves subscribing to new ordinary shares in the government-owned DNB. This new agreement follows the earlier SSA, which was terminated by all telecommunication companies. This was due to the Ministry of Communications and Digital’s announcement on May 3rd, 2023, stating its intention to carry out a 5G policy shift from a Single Wholesale Network to a Dual Network model. The policy shift will take effect upon DNB, a wholly-owned subsidiary of MoF Inc., in achieving 80% coverage of populated areas by the end of 2023.
Both parties have stated that the 5G DN transition will begin upon the issuance of the official 5G DN policy directive from the ministry. Under the new agreement, Celcom and Maxis will be subscribing to 100,000 DNB shares at an issue price of RM1.00 for each DNB share. Meanwhile, Digi Telecommunications Sdn Bhd, a wholly-owned subsidiary of Celcom, will be making a cash payment of RM233,233,333 to DNB as a prepayment for the 5G products and services to be delivered by DNB to DigiTe. Digi will also be making a prepayment towards products and services to be delivered by DNB while Maxis Broadband under the 5G Access Agreement signed on August 14th, 2023, will also be paying RM233,233,333.00 to DNB for services and products.
Additionally, CDB will have to purchase RM90,000,000 of MoF Inc.’s total advances to DNB. These advances were given by MoF Inc. to DNB to ensure that there is no delay in the 5G network rollout. This purchase will be made upon MoF Inc. exercising the put option granted to it under the Shareholders’ Agreement.
However, there is a big caveat on the whole deal with DNB which could have been the reason for the delay in signing the agreement in the first place. The clincher to DNB is that it there are any delays in achieving the 80% COPA target, it will delay the transition into the 5G DN model and this the agreement says may also result in actions being taken by MCMC, such as imposing fines and suspending or terminating DNB’s license.
So here DNB cant use tactics to delay and prevent 5G DN from taking off, the regulator said this clause is in place in order to allow the industry to form the Second 5G Network.
Under the agreement, the government will also eventually exit DNB upon achieving its 80% COPA target. Equity participants will then be eligible to become shareholders of the Second 5G Network.
The exact details of the 5G DN transition are still uncertain, as they are dependent on the decisions of certain government-led workstreams.
