The stakeholders in the Malaysian telecommunications sector had barely digested the implications of the announcement on 3 May 2023 by the Communications and Digital Minister that Malaysia will transition from a Single Wholesale Network (‘
SWN’) model to a Dual Wholesale Network (‘
DWN’) model when the Chief Operating Officer of the Malaysian Communications and Multimedia and Communications (‘
MCMC’), Datuk Mohd Ali Hanifiah Mohd Yunus, confirmed in an interview on 9 May 2023 that the Malaysian Government will be withdrawing its stake in Digital Nasional Berhad (‘
DNB’), the company that has been spearheading the implementation of Malaysia’s 5G infrastructure under the SWN model.
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According to a news report of Datuk Mohd Ali Hanifiah’s interview, “[
DNB]
will be taken over by a new entity following its scheduled achievement of 80% 5G coverage by end of this year.”
Datuk Mohd Ali Hanifiah further stated that two entities would be formed – one to take over DNB’s operations, and the other to set-up the second 5G network once DNB achieves 80% 5G coverage.
It has also been reported that following a meeting with telecommunications companies on 8 May 2023, the Government will form a task force with the goal of ensuring that 5G connectivity achieves 80% coverage by the end of 2023 to allow for a smooth transition to a DWN model in early 2024. The task force will be co-chaired by the Secretaries-General of the Finance Ministry and the Communications and Digital Ministry, under the purview of MCMC, and will include representatives of the mobile network operators in Malaysia, namely CelcomDigi, Maxis, Telekom Malaysia, YTL Communications and U Mobile, with the possible addition of other parties from time to time.
The privatisation of DNB will mean that the owners of both 5G infrastructure networks in Malaysia will be privately-owned.
The privatisation of DNB will be the second U-turn in Malaysia’s 5G odyssey in the space of one week; the first being the Government’s decision to transition from an SWN model to a DWN model. DNB had embarked on its 5G journey as a wholly-owned subsidiary of the Malaysian Government. It then evolved into a company that was to include an additional four shareholders consisting of mobile network operators who had agreed to acquire minority stakes in DNB. It will next evolve into a company devoid of Government shareholding.
It is to be noted that the news report did not identify the entity that will take over DNB or the basis on which the entity will be selected, unlike the previous announcement on the transition to a DWN model where the Communications and Digital Minister stated that the second 5G network operator will be selected through an open tender process. The news report also did not shed light on the reason for the Government’s withdrawal from participating in DNB.
The 5G landscape in Malaysia has become even more interesting than it was a week ago.
Our Alert on the Government’s decision to transition from a SWN model to a DWN model can be read
here.
Alert by Jillian Chia (Partner), Natalie Lim (Partner) and Cheam Tat Sean (Associate) of the Technology, Media and Telecommunications Practice of Skrine.