- Each of the 5 telcos will get a 14 % and add US$ 50m into Coc
- Important questions still remain in the air especially with regard to 2nd 5G system
Five Malaysian Mobile Network Operators ( MNOs ) – CelcomDigi Bad ( CelcomDigi) through Infranation Sdn Bhd, Maxis Broadband Sdn Bhd ( Maxis ), U Mobile Sdn Bhd ( U Mobile ), Telekom Malaysia Bhd ( TM) and YTL Power International Bhd (YTL ) have, on Dec 1, executed share subscription agreements ( SSAs ) to take up equity stakes in Digital Nasional Bhd ( DNB) which is tasked by the Malaysian government to expeditiously roll out a supply- driven 5G network nationwide. An event commemorating the SSAs drafting was held at TRX Exchange 106 in Kuala Lumpur on 1 Dec with the Minister of Communications &, Digital, Fahmi Fadzil, in attendance.
The SSAs give effect to the MNOs ‘ collective subscription of 70 % equity or 14 % each in DNB with the Government, through the Minister of Finance ( Incorporated ) ( MOF Inc ), retaining the remaining 30 % and holding a Special Golden Share.
The SSA , is subject to adequate due dedication by the telcos that is expected to be completed between Feb to April 2024. No facts were provided on the freedom provided by the president’s Golden Share, nor on the content of DNB’s Board.
The signing of the SSAs will see each MNO injecting approximately US$ 50.08 million ( RM233 million ), which will be utilised to meet DNB’s funding requirements. In 2021 the MOF had injected US$ 107.13 million ( RM500 million ) into DNB as startup capital for it to hit the ground running.
According to DNB, the murder of the SSAs by the MNOs marked a significant accomplishment by the Task Force for the Application of 5G Dual Network in Malaysia, whose people comprise members from the Ministry of Finance, the Ministry of Communications and Digital, the Malaysian Communications and Multimedia Commission (MCMC), DNB as well as the MNOs. The 5G Task Force was established by the Government on 9 May 2023 with the objective to ensure the smooth transition from the Single Wholesale Network ( SWN ) model to the Dual Network ( DN) model.
The Directors of the five MNOs issued supportive comments on signing the Dss.
Idham Nawawi, CEO of CelcomDigi said,” The move to an business- led model may be instrumental in achieving a powerful roll- out in Malaysia by leveraging the social assets and resources from the telco industry, and in building a strong platform for future technology evolution and service innovation. CelcomDigi is pleased to partner with the Government and the industry in building 5G for the future and for all Malaysians” . ,
However Goh Seow Eng, CEO of Maxis said that it supports the Government’s online interests” to bring more monetary benefits to Malay, including a smooth transition to a double 5G network” . ,
Amar Huzaimi Md Deris, Group CEO of TM said,” The filing of Promote Subscription Agreement marks another important step in our responsibility to support the Government’s online mission, advancing the world’s digital economy and fostering growth leveraging on 5G. ‘ ‘
Wong Heang Tuck, CEO, U Mobile said that it shared , the Government’s perception of embracing 5G to narrow the digital break and lead a more powerful online business country”. The filing of the Promote Subscription Agreement with DNB is another step forward to those passions and towards the country’s transition to a tenacious two 5G system.”
Taking note that the signing of the SSA is a primary step in the proposals to transition to a double retail network environment, Yeoh Seok Hong, Managing Director of YTL Power International said”, We look forward to guidance from MCMC and the Ministry as parties work on the thorough business plan for the next network to ensure that this model will deliver equitable and inclusive 5G services.”
Business observers claim that despite the signing, a significant issue still hangs in the balance. Fahmi responded that the MNOs and the MCMC should be contacted when asked during the press and nbsp conference what will happen to the SSSA when some of them acquire stakes in the following 5G network that is being built.
While this was going on, KL-based brokerage research firm Kenanga Research maintained its Fat rating on the telco sector in a 4th December SSA agreement analysis based on its conviction that the sector’s robust cashflow and dividend yield potential would not be impacted.
Given that the final decision regarding the mechanics of the 5G DN has not yet been made, the study home stated that it was balanced on the SSA growth. Additionally, given their sizable EBITDA base, the company players ‘ effect on gearing is negligible. Therefore, this suggests that their ability to pay dividends and cashflow prowess remain intact at this point, “it said, adding that it was slowly positive, pending further details and clarity.”  ,
The telcos are required to purchase MoF’s remaining 30 % stake in DNB for at least RM190 million each, according to Kenanga Research, subject to the fulfillment of conditions precedent, such as satisfactory due diligence findings on the network and the achievement of 80 % 5G rollout to populated areas. By the first fourth of 2024, this practice should be finished.
DNB had expanded its 5G network to cover 73 % of the nation’s populated areas as of end-October 2023, and it had 3.6 million subscribers to its service, representing an adoption rate of 10.8 %.