Malaysia’s five mobile operators have finally signed share subscription agreements (SSAs) to take equity stakes in wholesale 5G operator Digital Nasional Berhad (DNB), which also clears the way for a second 5G operator to be established next year.
Telekom Malaysia, Maxis, U Mobile, YTL and CelcomDigi (via Infranation) signed the SSAs on Friday, agreeing to collectively take a 70% stake in DNB, with each taking a 14% stake. Each telco will also inject around RM233 million (US$50.1 million) – a total of RM1.16 billion – which will be utilised to meet DNB’s funding requirements.
The government’s Minister of Finance (MOF) will hold the remaining 30% as well as a “special share”, according to a DNB statement. A document from the Ministry of Communication and Digital obtained by news site The Edge Malaysia says that the special share “provides certain rights to its holder – including on national interest and the appointment of a director representing MOF”.
The same document also said that the SSAs are expected to be completed between February and April 2024. The SSAs were expected to be finalised earlier this year, but saw repeated delays as parties haggled over the fine print and terms of the complex agreements.
The SSAs were hashed out and finalised via the 5G Task Force, which comprises the MOF, the Ministry of Communications and Digital, the Malaysian Communications and Multimedia Commission (MCMC), DNB and all five operators. The task force was established by the government in May 2023 to transition from the current Single Wholesale Network (SWN) model to a Dual Network (DN) model.
The finalised SSAs will enable the government to proceed with its plan to set up a second 5G operator to compete with DNB once its 5G network covers 80% of populated areas. DNB’s network coverage is currently 73%, although actual subscriber numbers remain low – DNB reported 3.6 million 5G service subscriptions in Malaysia at the end of October 2023, which works out to 10.8% market penetration.
According to The Edge, Communications and Digital Minister Fahmi Fadzil said the second 5G operator – described in official documents as “Entity B” – will be strictly commercial, with no government ownership. Under the SSA terms, the MOF could exit DNB once the network reaches 80% coverage and the MCMC greenlights Entity B.
The operators will also be able to decide among themselves who stays in DNB and who moves over to Entity B, although MCMC has the final say.