In May 2023, the Malaysian Government made two significant announcements in relation to the implementation of 5G in Malaysia.
First, the Government announced on 3 May 2023 that the country will transition from a Single Wholesale Network model to a Dual Wholesale Network model for implementing its 5G infrastructure and that a new entity (‘
Entity B’) will be allowed to set up the second 5G network once the first entity, Digital Nasional Berhad (‘
Entity A’), has attained 80% 5G coverage of the country’s populated areas, which is expected to be achieved by end-2023.
Six days later, on 9 May 2023, the Chief Operating Officer of the Malaysian Communications and Multimedia and Communications, Datuk Mohd Ali Hanifiah Mohd Yunus, confirmed in an interview that the Malaysian Government will be withdrawing its stake in Entity A, which has been spearheading the implementation of Malaysia’s 5G infrastructure under the erstwhile Single Wholesale Network model.
Our Alerts on the above developments can be accessed
here and
here.
It was reported on 8 June 2023 that the Minister of Communications and Digital, Fahmi Fadzil (‘
Minister’) said during his keynote address at a forum “
Digital Malaysia: Tomorrow’s Infrastructure, Today” held the previous day that
“… there will be entities A and B, where entity A, or DNB, will continue along with approximately half of the mobile network operators (MNOs), whereas entity B will comprise the other portion of MNOs”.
1
The Minister also shared that 5G coverage by Entity A had reached 62.1% coverage of populated areas as at 31 May 2023 as compared to 59.5% coverage as of end-April 2023.
2
Whilst the Minister did state that Entity A will
“continue along with approximately half of the mobile network operators”, no further details were provided by the Minister as to which mobile network operators (‘
MNOs’) these would be. If the MNOs continuing along with Entity A is to be based on the arrangements that existed
before the Minister announced the transition to a Dual Wholesale Network model, Telekom Malaysia Berhad, YTL Communications Sdn Bhd and CelcomDigi Berhad (which had agreed to subscribe for shares in Entity A) will continue as shareholders in Entity A, whilst Maxis Berhad and U Mobile Sdn Bhd (which had both declined to subscribe for shares in Entity A) could emerge as shareholders in Entity B. However, it is to be noted that CelcomDigi Berhad (whose MNO subsidiaries Celcom Mobile Sdn Bhd and Digi Telecommunications Sdn Bhd have since merged into one MNO) and Telekom Malaysia Berhad have terminated their agreements to subscribe for shares in Entity A.
3
Given the substantial investment required to deploy and maintain a 5G network, it is hoped that Entity A and Entity B will each be backed by financially strong shareholders to ensure the long term success of the Dual Wholesale Network model that Malaysia has recently opted for.
In the meantime, Malaysia’s 5G odyssey continues…
Alert by Jillian Chia (Partner), Natalie Lim (Partner) and Cheam Tat Sean (Associate) of the Technology, Media and Telecommunications Practice of Skrine.