After a five-month review, the Malaysian Government announced on 3 May 2023 that the country will transition from a Single Wholesale Network (‘
SWN’) model to a Dual Wholesale Network (‘
DWN’) model for implementing its 5G infrastructure.
1
The Government had in late-2021 commenced the 5G rollout through a SWN model led by Digital Nasional Berhad (‘
DNB’) in which the Government was initially the sole shareholder. Subsequently, equity stakes in DNB were offered to six Malaysian mobile network operators, of which four accepted (directly or through their respective subsidiaries). These operators are Celcom Mobile Sdn Bhd (‘
Celcom’) (12.5%), Digi Telecommunications Sdn Bhd (‘
Digi’) (12.5%), Telekom Malaysia Berhad (‘
TM’) (20%) and YTL Communications Sdn Bhd (‘
YES’) (20%).
2
According to the Minister of Communications and Digital, Fahmi Fadzil (‘
Minister’), the decision to switch to the DWN model was made after considering the sustainability of the telecommunications industry ecosystem and the benefits of a competitive landscape for 5G wholesale services.
The key highlights of the DWN model are as follows:
It is worth noting that in March 2022, the previous Malaysian government had considered replacing the SWN model with a DWN model but decided to retain the SWN model.
3
On the same day, two related events were reported:
First, CelcomDigi Berhad issued an announcement on Bursa Malaysia that its wholly-owned subsidiaries, Celcom and Digi, have terminated their respective share subscription agreements dated 7 October 2022, under which each subsidiary had agreed to acquire a 12.5% shareholding in DNB, due to non-fulfilment of the conditions precedent upon expiration of the conditions fulfilment period.
4 It remains to be seen whether Celcom and Digi can be persuaded to revive their share subscription agreements, and how the remaining two mobile network operators, TM and YES, will proceed, assuming the conditions precedent in their respective share subscription agreements remain unfulfilled by the expiry of the respective conditions fulfilment period.
Second, Maxis Berhad, one of the mobile network operators which declined to take up shares in DNB, issued a statement that it looked forward to playing a more direct role in the implementation of Phase 2 by leveraging on its expertise, resources and existing infrastructure.
5 It would seem from the statement that Maxis will seek to be involved in the development of the 5G infrastructure by Entity B.
Interesting times lie ahead for the 5G landscape in Malaysia. In the meantime, let us hope that there will not be another
volte-face in the implementation of 5G infrastructure should there be yet another change in government in the country.
Alert by Jillian Chia (Partner), Natalie Lim (Partner) and Cheam Tat Sean (Associate) of the Technology, Media and Telecommunications Practice of Skrine.