Category Archives: Digital Nasional Berhad

U Mobile says no to stake in DNB, to go solo on 5G

Telecommunications company U Mobile Sdn Bhd said today it has rejected the government’s proposal to all major telcos to purchase a stake in Digital Nasional Berhad’s (DNB) for the 5G roll-out, via its share subscription agreement (SSA).

In a statement today, U Mobile said that it would be going solo in offering its 5G services and products to consumers.

“U Mobile has had extensive discussions and deliberations on the matter and after taking into consideration the terms of the investment as it currently stands, the telco has decided that it will not pursue the investment option in DNB.

“The telco believes it would better serve Malaysians by focusing on its strengths of providing innovative and unbeatable connectivity and digital services, that would realise the full potential of 5G technology. The telco’s decision not to invest in DNB does not affect its ability to provide 5G services to customers as access to DNB’s 5G network infrastructure is governed by a separate access agreement, which is not linked to the equity investment in DNB,” it said.

DNB was established in early March 2021 to accelerate the deployment of 5G infrastructure and network in Malaysia. It will offer 5G as a wholesale network service to other telcos.

Putrajaya has been in constant negotiations with telcos in the country over the rollout of 5G, with telcos constantly pushing back for more favourable terms — advocating for a dual wholesale network (DWN) model instead of the government’s single wholesale network (SWN) — which they claim would provide better optimising availability and pricing of 5G.

U Mobile said that the company and other telcos are in discussions to finalise the 5G access agreement with DNB.

“Once it is finalised and signed, DNB’s 5G access when combined with U Mobile’s existing 4G network will enable U Mobile customers to enjoy a truly seamless connectivity experience. U Mobile has full faith that DNB will be on schedule for the deployment of quality 5G network infrastructure and that it will carry out the government’s mandate to provide wholesale 5G coverage and capacity on an equitable and non-discriminatory basis via the 5G access agreement.

“U Mobile has been testing 5G services and is looking forward to our customers enjoying the full benefits of 5G with our 5G-ready products and services soon,” it added.

DNB yesterday said that the SSAs will be revised to accommodate just the four remaining major telecommunications firms, after being rejected by two mobile network operators (MNOs).

The national 5G agency said it considered the SSAs finalised and ready to be executed with the six mobile carriers yesterday, but two ultimately did not continue.

DNB said that one operator decided not to proceed while the other did not respond despite its confirmation to participate earlier.

The firm did not name the carriers, although it was earlier reported that Maxis Bhd and U Mobile had declined to take up the shareholder agreement after negotiations did not meet their requirements.

Reuters report quoting sources said that the two mobile carriers declined the offer after the government knocked back a proposal that four carriers — Maxis, U Mobile, along with Celcom Axiata Bhd and DiGi Telecommunications — take a combined majority stake in the agency.

But the government had instead asked six mobile operators in the country to agree to take up a combined 70 per cent stake in the agency, but Maxis and U Mobile reportedly declined, as they could not see the benefits of being a minority shareholder.

Maxis and U Mobile could not see benefits in being a minority shareholder in DNB, according to two of the sources, who requested anonymity as they were not authorised to talk about the private negotiations.

Despite the development, however, DNB said that discussions on the 5G access agreements were progressing with all six major mobile carriers in the country and that the rollout plan is on track.

Malaysia’s 5g Turmoil Continues As Operators Refuse Stakes In Dnb

SOURCES SUGGEST MAXIS AND U MOBILE WILL NOT BE TAKING STAKES IN THE GOVERNMENT’S NATIONAL 5G AGENCY, HAVING ARGUED AGAINST THE VALUE IN BECOMING MINORITY STAKEHOLDERS

Malaysia’s relatively unique approach to 5G continues to prove disastrous, with sources this week suggesting that two of the nation’s telcos will not buy a stake in Digital Nasional Berhad (DNB) after all.

The government set up DNB early in 2021, aiming to create a single national 5G operator from which the country’s other 5G operators could rent 5G services. At the time, the government said this would be more efficient and cost-effective than the operators rolling out the infrastructure themselves, noting that the plan eliminated potential overbuild.

The operators, however, said that this plan would be more expensive for them than deploying 5G themselves, with many refusing to engage with DNB at all.

Over the past year, the government has taken various measures to make partnering with DNB more attractive, ultimately settling on a plan that would see 70% of DNB’s ownership handed over to the country’s six mobile operators in individual minority stakes.

By August 2022, the government finally seemed hopeful that the nation’s operators were ready to buy-in, literally, to the government’s 5G vision, with Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz telling the media that the last holdouts –Maxis and U Mobile – had confirmed they would take a stake in DNB.

The two operators, alongside rivals Celcom Axiata and DiGi Telecommunications, had previously argued that they should allowed to own a combined majority stake, though this plan was rejected by the government.

Instead, the Malaysian state began floating the idea that foreign companies could take the place of domestic operators in owning a piece of DNB if necessary, with Tengku Zafrul noting interest had been received from companies in India, Hong Kong, and Singapore.

“There are many who have registered strong interest […] because to them there is no more capex. And then they say we have got the technology and we know how to play the game,” he explained.

Now, however, it seems that discussions have fallen at the last hurdle, with sources suggesting that Maxis and U Mobile are refusing a stake in DNB. According to reports, the two operators still believe there is little value in taking a majority stake in the business but wanted to continue talks about gaining access to DNB’s network.

Without the participation of Maxis and U Mobile, the stake sale process itself is potentially scuppered, with sources suggesting that “(the parties) will have to try and restructure the deal”.

It is possible that the four participating operators will simply have their potential stakes increased to absorb the missing stakes of Maxis and U Mobile, though even this simple solution will require new approvals and will thus delay the country’s 5G rollout yet further.

Malaysia is one of the last countries in Southeast Asia to launch commercial 5G services, with many of its neighbours having been enjoying such technology for over a year now.

DNB’s 5G: Eternally Revolving Deadline (Opinion)

Written by Dr Rais Hussin, CEO of EMIR Research, an independent think tank focused on strategic policy recommendations based on rigorous research.

WHILE Digital Nasional Berhad (DNB) and the Ministry of Finance (MoF) still struggles to coerce the local telcos to buy into its Single Wholesale Network (SWN), the global 5G rollout continues at varying success. And while even Malaysia’s more successful 5G-demand-driven counterparts experience hiccups on their 5G journey, DNB’s supply-driven strategy, with this backdrop, raises even more concerns.

According to GSA’s “5G-Market Snapshot”, from June 2022, 205 operators in 80 countries and territories had launched 5G mobile services, with Malaysia still cutting a lonely figurein its SWN approach to 5G rollout.

As of mid-2022, South Korea appears to be an overall leader in the global 5G rollout.

Although China and US are leading global 5G coverage, with South Korea coming up 4th in this list after China, the US, and the Philippines, according to the 5G Speedcheck Indexupdated on June 2022, South Korea is leading 5G race in terms of highest download speed (8 times, 11 times and 58 times faster than the US, the Philippines and China respectively).

South Korea is also among the leaders regarding 5G availability (the percentage of time users are connected to the 5G network), according to the latest OpenSignal data as of June 2022.

The above statistics makes South Korea a suitable testing ground for 5G analysis, based on which it is already possible to draw important lessons.

5G adoption among the customers seems to stall even in South Korea, and it is certainly not as enthusiastic as it was in the case of its predecessor network.

On this account, interesting comparisons were reported by Reuters on May 13, 2022. As of March 2022 (three years into 5G), the number of 5G subscribers in South Korea was just under half the number of its 4G users, while over three years into 4G rollout, the number of its users had more than doubled those of 3G.

Similarly, in the first two to three years of 4G, South Korean telcos saw their average revenue per user (ARPU) jump from 5% to 12% annually. By contrast, very meagre increases in ARPU (3.7% for KT and 0.6% for SK Telecom Co) or even decline (4.2% decline for LG Uplus Corp) from a year earlier forced South Korean telcos even to start looking into ways of diversifying their core business, to be still, able to pay off their investors. And all of this given that South Korean telcos already spent US$20 billion on boosting the connections speed by just five-fold compared to 4G. However, given the unsavory outcome numbers, they are hugely hesitant to commit resources to boost it further.

The problem that could be seen from the very beginning is now, crystal clear and summed by Kevin Loughran, wireless Chief Technology Officer for Jabil, global electronics manufacturing company: “… the investments in technology development and spectrum are by no means incremental. They lean more toward astronomical. In order to balance these investments, the user experience in 5G cannot be incremental. It needs to be disruptive.”

To create the demand, 5G requires a true “killing application”. Such killing application, by definition, must deploy the broad 5G feature spectrum.

However, even if the telcos are willing to invest heavily in the ability to provide such a broad feature set, the customers may have different strategies on how to deploy it — they may still focus on a subset of 5G features that they would purchase.

Such a “dilution” on the demand side presents a serious challenge to the overall economics of the 5G rollout. But this is for the future when most households start having numerous robots and truly connected smart homes, and the roads of our cities will be flooded with autonomous vehicles demanding grid traffic automation — the reality that is far away even for South Korea.

As of now, the majority of Malaysia’s households save every spare cent to be able to put food on their tables. Therefore, they are likely to find it even more difficult than the South Koreans to justify an extra monthly outlay for a five-fold increase in their mobile Internet speed.

If an average mobile Internet user is not fully utilising even the potential of 4G anyway, the question arises: is it not logical to focus the efforts on roadblocks to a faster 4G — the network really needed here and now — by upgrading the network, increasing national fiberisation (focus on the backhaul, lack of which, is the main cause for the lack of the progress for Malaysia’s broadband expansion, according to Dr Mohamed Awang Lah), and repurposing or releasing an additional spectrum?

Reading Jendela’s Q1 2022 report, which, Dr Mohamed Awang Lah insists, is still “service provider-centric report, not end-users’”, Malaysia’s 4G population coverage is “on track”, increased to 95.5% in Q1 2022, and is well poised to achieve its 96.9% populated area coverage target by the end of 2022. In addition, the average mobile broadband speed has increased to 40.13 Mbps, surpassing the original Phase 1 target of 35 Mbps.

In addition, this report states that the 3G spectrum is almost completely retired. Therefore, we could consider repurposing it to increase the 4G frequency band. And, if the government could reconsider assigning sub-6 GHz band to telcos rather than DNB, this would not only allow them to organically (based on demand) rollout 5G at globally comparable costs but also simultaneously speed up their 4G networks by extending their 4G frequency band even wider (See Figure 1). Meanwhile, DNB as a government-led entity should solely focus its efforts on sharing the passive infrastructure, especially, the backhaul link (one of the highest-cost in infrastructure) to enable last mile competition. Now, this is the approach that will reap significant benefits to the end users.

Therefore, it is timely to ask again how all the above stands against DNB’s projected costs, supply-driven approach, ambitious coverage targets and over-arching official choreographed “narrative” objective? And most importantly, who will make up for the potential losses encountered?

Not surprising, we see no progress from where the issue of major telcos taking up a stake in DNB’s SWN since end of June 2022 (See Figure 2) when the Communications and Multimedia Minister assured the public that the equity uptake deal by the major telcos should be finalised and signed in another week or so.

However, one and a half months later, on August 14, 2022, the Finance Minister Tengku Zafrul’s press statement implied that some of the major telcos have yet to agree to the Reference Access Offer (RAO) terms, although they have agreed to take up the stake in DNB as offered by the government.

The finance minister further emphasized the set deadline is August 31, 2022 for the telcos to sign up and that foreign international companies are “queuing up” for the access to Malaysian market. The Finance Minister added that it is very hard not to allow foreign players into the Malaysian market considering the potential for lower consumer prices.

However, the believe that DNB’s RAO terms are “not commercially viable” and likely to lead to higher customer costs and slower adoption rates is precisely one of the main points of contention between the local telcos and DNB apart from the refusal to become a “passive shareholder” with restrictive terms.

And if the RAO terms are not commercially viable even for the local telcos who operates in a Ringgit Malaysia environment, margins for the foreign telcos could be further squeezed due to a very weak ringgit making it absolutely not clear how this can be translated into a lower prices for Malaysian consumers.

Nevertheless, the deadline is here and gone. And two of Malaysia’s largest telcos have just reportedly declined to take up stake in DNB even though they are still open to continue discussing how to make “not commercially viable” RAO, commercially viable. Here lies another problem, DNB and MoF reportedly dished out another dateline i.e. September 30, 2022 for the access agreement for the local telcos. This, despite the absence of regulatory framework for the 5G Access Agreement as MCMC has yet to release the framework covering areas like Service Level Agreement (SLA), pricing etc. Apparently it will be ready only in December 2022. Sign first, framework later.

We could foresee that this may trigger other local and foreign telcos, including those who have stake in local carriers, to question the reasons for such a refusal. No foreign telco or investor will sign up for DNB equity under present conditions, unless MoF underwrites the risks.

It is important to note logically, that the 4 telcos that signed up earlier to take up the stake, will have to revert to their respective Boards, as it was previously at RM200 million per telco equity investment instead of RM300 million now, given 2 telcos have reportedly declined, given the total offer of equity investment at RM1.2 billion for 70%.

Forget not Telenor with a substantial shareholding (49%) in Digi, who is known for their good governance and integrity with impeccable transparency will start asking serious questions.

And past the deadline, Malaysian public is beyond excited to see which foreign telcos take up the stake in DNB. Foreign telcos have higher standards of governance and integrity with wholesome transparency and cannot be dictated by whims or fancies of political masters or unreasonable deadlines.

They normally have higher and stringent levels of due diligence and what more if they are from a developed nation. Unless it is “North Korea Telecoms”.

So, the DNB saga will be a never-ending story with never-ending deadlines. 6G is in trials now, and even before the waves of 5G settles in Malaysia, 6G will start its roll-out elsewhere.

6 Malaysian telcos set to sign 5G deal on August 31

Malaysian Communications and multimedia minister Annuar Musa said discussions on taking stakes in Digital Nasional Bhd (DNB) are progressing well and are set to meet the deadline, with the six telcos signing the deals on Aug 31.

He said the Malaysian Communications and Multimedia Commission (MCMC) would be chairing a meeting on Aug 29 to decide on a few terms.

He also had a meeting with finance minister Tengku Zafrul Aziz yesterday on the restructuring exercise to pave the way for all six telcos to take up the 70% stake in DNB.

“I had the discussion with the finance minister as he was responsible for DNB before it was transferred to my ministry,” he added.

Earlier, Celcom Axiata Bhd CEO Isham Nawawi said the telco had consolidated more than 1,000 sites under its 5G initiative.

It has 39 partners to support its 5G rollout, of which 24 are local companies.

On another matter, Annuar said the Cabinet yesterday agreed that the existing Communications and Multimedia Act 1998 (Act 588) and the Malaysian Communications and Multimedia Commission Act 1998 (Act 589) be amended to provide stronger legal provisions to face cybersecurity threats.

“Hopefully, in the next Parliament sitting, we can table the amendments for both acts.”

Annuar said the amendments are crucial as the country’s telecommunication ecosystem is facing threats of online fraud and hacking by irresponsible individuals.

Malaysia: New August 31 deadline for telcos to agree on DNB stake sale terms

Malaysia’s mobile network operators (MNOs) have until Aug 31 to agree on the terms related to the acquisition of shares in 5G network provider Digital Nasional Bhd (DNB), Finance Minister Tengku Datuk Seri Zafrul Aziz was quoted by the Malay Mail as saying.

In the report on Monday (Aug 15), the Malay Mail cited that the MNOs will have to agree to the terms by the new deadline or risk losing out on 5G access.

The government previously set a June 30 deadline for the telcos to agree on the 70% stake purchase in DNB, a company owned by the Ministry of Finance, or the 5G spectrum will be opened up to international players.

Following the telcos’ principal acceptance at the time, Communications and Multimedia Minister Tan Sri Annuar Musa said official announcements would be made in the following week, but it is understood there were further back-and-forth ironing out the related conditions.

In the report on Monday, Tengku Zafrul was quoted as saying that while it is very hard not to allow foreign players to come in to raise competition and potentially lower the service prices offered, local telcos should be given the first bite.

“I think we have to give them (local telcos) an opportunity to continue to be the main players as they have invested so much,” Tengku Zafrul was quoted as saying.

DNB is the company which will be owning the 5G assets in the country and which will lease the assets to local telcos under a single wholesale network (SWN) model — a change from previous models where each telco can develop their own assets focusing in high-traffic areas.

The DNB stake sale was a compromise given by the government to the local operators after a proposal by the big four MNOs belonging to Maxis Bhd, U Mobile Sdn Bhd, Digi.Com Bhd, and Axiata Group Bhd (for Celcom) to introduce a second 5G wholesale operator under a dual wholesale network model.

Aside from the big four telcos, Telekom Malaysia Bhd (for Unifi Mobile) and YTL Power International Bhd (for Yes 5G) have also given the nod to acquire a stake in DNB.

Telekom Malaysia has joined the 5G network pilot with DNB, while YTL Power has already launched its 5G services in late May to claim first place in rolling out the network in the country.

At the time of writing, Maxis shares were up three sen or 0.79% to RM3.82. Other telco counters also rose, including Digi (up one sen or 0.27% at RM3.69), Axiata (up five sen or 1.72% to RM2.95), Telekom Malaysia (up one sen or 0.18% to RM5.59), while YTL Power shares fell half a sen or 0.68% to 73 sen.