MoF holds telcos to June 30 deadline for 5G, private equity firms circle DNB for potential stake

KUALA LUMPUR, May 23 — Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz has indicated to two of the big four telecommunication firms that the government intends to stick to its June 30 deadline for them to sign up for 5G network contracts and shares in the state 5G agency, rejecting a move by the companies to demand a controlling stake in Digital Nasional Berhad (DNB).

Malay Mail has learnt that this was conveyed to representatives of DiGi Telecommunications and U Mobile last week. Tengku Zafrul is scheduled to meet officials from Celcom Axiata Bhd and Maxis Bhd early next week.

If the big four telcos — collectively known as CDMU — do not sign up with DNB by June 30, they risk being shut out of Malaysia's already delayed 5G rollout. Sources have also told Malay Mail that stakes in DNB would then be open to other operators.

Private equity, both domestic and foreign, are also understood to be interested in a stake in DNB and the government is not opposed to selling a piece of the pie to them if the big four CDMU rejects the offers to them.

DNB was set up by the government to quickly deploy Malaysia's 5G network amid concerns that the mobile cellular market, now dominated by the big four CDMU companies, was lagging behind other countries in introducing the fifth generation technology standard which started rolling out globally in 2019.

Concerns over the delay in 5G rollout and its impact on Malaysia's competitiveness in the region is understood to be forming the basis for the Finance Ministry's negotiations with telcos.

DNB will charge telcos for 5G access rather than allocating them spectrum to build their own concurrent networks.

In March the government offered all telecom firms in the country, including the CDMU four, a combined equity stake of 70 per cent. The CDMU firms are currently locked in dispute with DNB over pricing of the wholesale network set up by the latter.

Last Thursday, Reuters reported that the CDMU firms are now seeking a controlling stake as well as operational control to take charge of wholesale price setting for the entire industry. Nine companies have been offered the 70 per cent stake in DNB, leaving the CDMU four with only a combined minority share.

In the May 9 letter leaked to Reuters last week, it was revealed the CDMU is seeking instead a 51 per cent controlling stake just for the four companies.

So far two smaller operators — Telekom Malaysia and YTL Communications, a unit of YTL Corporation — have signed up to the government’s 5G plan.

DNB has said it will charge operators less to access its 5G network than their costs for 4G and has also offered 5G trial services to carriers for free until June 30 as it begins network deployment.It has also acknowledged questions over its transparency, telling Reuters last year that the country’s communications regulator would adopt stringent public guidelines to ensure fair pricing and a smooth rollout.