The decision by the Malaysian Communications and Multimedia Commission (MCMC) to award the tender for the country’s second 5G network to U Mobile Sdn. has faced sharp criticism. On Nov 1, U Mobile, a smaller player in the telecommunications industry, was chosen over larger competitors CelcomDigi Bhd. and Maxis Bhd., a move that analysts have described as a surprise.
BMI, a Fitch Solutions company, raised concerns about U Mobile’s selection, given its smaller scale and reliance on foreign investments. In a note issued on Nov 6, the company called for greater transparency regarding U Mobile’s proposal. Despite the criticism, MCMC stood by its decision, insisting the selection process was rigorous. Communications Minister Fahmi Fadzil affirmed that the decision was final and would not be reviewed.
U Mobile’s largest shareholder is Straits Mobile Investments Pte, a subsidiary of Singapore’s Temasek Holdings, which holds almost half of the company’s shares. The second-largest shareholder is Malaysia’s King, Sultan Ibrahim Iskandar, who owns approximately 22%. U Mobile’s chairman is billionaire tycoon Vincent Tan.
This development is a setback for Prime Minister Anwar Ibrahim, who came into power in November 2022 with a pledge to tackle cronyism and corruption. Asrul Hadi Abdullah Sani, a partner at ADA Southeast Asia, argued that the award process could undermine Anwar’s commitment to good governance and damage investor confidence.
Prime Minister Anwar, who is attending APEC meetings this week, has yet to comment publicly on the decision. His office did not respond to requests for clarification, nor did U Mobile, Tan, or the national palace.
U Mobile, which is privately held, announced it would reduce Straits Mobile’s stake to 20% following the decision. Unlike its competitors, U Mobile has not yet gone public, although it has considered an initial public offering (IPO) since 2019.
CIMB Securities analyst Foong Choong Chen had earlier noted that U Mobile’s selection was unexpected, given that Maxis and CelcomDigi were seen as having stronger financial standing. U Mobile has stated that it will fund the 5G rollout independently, without using taxpayer money.
The decision has also sparked controversy among lawmakers, including Hassan Karim from Anwar’s own Parti Keadilan Rakyat. Karim questioned whether the decision was influenced by U Mobile’s shareholders and accused the government of repeating past mistakes by creating the perception of “crony capitalism.”
Vincent Tan defended the choice, stating that Sultan Ibrahim had owned shares in U Mobile since 2015, prior to becoming king in 2019. The Sultan, who is from the southern state of Johor, assumed the throne in January under Malaysia’s rotating monarchy system, where the nine hereditary rulers take turns serving five-year terms. Tan further emphasized that comments about the King should be based on facts, not speculation.
Political analyst Adib Zalkapli weighed in, saying that the primary focus should be on ensuring Malaysians have access to the best telecommunications services. He added, “We will know in the near future if this was the consideration when U Mobile was made the second 5G operator.”
Bloomberg
