The Minister of Communications and Digital, Fahmi Fadzil (“
Minister”), announced on 1 December 2023 that the five mobile network operators (“
MNOs”) have each signed a share subscription agreement (“
SSA”) with Digital Nasional Berhad (“
Entity A”).
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The five MNOs are CelcomDigi Berhad (via its wholly-owned subsidiary, Infranation Sdn Bhd), Maxis Berhad (via its wholly-owned subsidiary, Maxis Broadband Sdn Bhd), U Mobile Sdn Bhd, Telekom Malaysia Berhad and YTL Power International Bhd (the holding company of YTL Communications Sdn. Bhd.). Under their respective SSAs, the MNOs will,
inter alia, subscribe for 100,000 shares in Entity A and make an advance of RM233,333,333 to Entity A as prepayment for 5G products and services. According to a media report, “
The MNOs were allocated a total of 70% equity, or 14% split evenly among them.” The remaining 30% of Entity A’s enlarged share capital will be held by the Minister of Finance Inc. of Malaysia (“
MOF Inc.”) who will in addition, hold a “
special share” that will confer certain rights involving national interests, as well as the right to appoint a director to represent the Government’s interest on the board of directors of Entity A.
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Based on the announcements to Bursa Malaysia Securities by several of the MNOs that are part of a listed group, a shareholders agreement will be entered into at completion of the SSAs that will, among others, require certain MNOs to purchase some shares held by MOF Inc. in Entity A.
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As may be recalled, the Malaysian Government had announced in May 2023 that it would switch from a “
single wholesale network” (SWN) model to a “
dual wholesale network” (DWN) model and that a second entity (“
Entity B”) will be selected to build the second 5G network after Entity A’s network has attained 80% coverage of populated areas. The Minister also announced that as of October 2023, Entity A’s network has attained a 73% coverage of populated areas.
It has also been reported that “
A mutual agreement will have to be reached among the MNOs as to which will make a jump to Entity B, with the Malaysian Communications and Multimedia Commission (MCMC) having the discretion to make a final decision should no deal be reached.”
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Comments
With the targeted 80% coverage of populated areas approaching, a significant transition looms on the horizon and the big question is: which of the MNOs will “jump” to Entity B? It is hoped that when this is determined, both Entity A and Entity B will have financially strong shareholders to ensure the long term success of their respective 5G networks.
As we stand at this crossroads, one cannot help but wonder: Will the journey ahead be smooth sailing or will there be further twists in Malaysia’s 5G saga?
For those keen on tracing the trajectory of Malaysia’s 5G implementation, some of our previous alerts can be accessed via the links provided below:
One is better than two – Government opts for single wholesale network for 5G
5G: Malaysia does a volte-face to Dual Wholesale Model
5G: Malaysian Government announces another U-turn
5G: The Odyssey Continues …
Alert by Natalie Lim (Partner) and Cheam Tat Sean (Associate) of the Technology, Media and Telecommunications Practice of Skrine.