Malaysia’s 5G Compromise: Anwar Administration Nears Deal For Second Operator Amidst Telecom Standoff

Eventually, the private sector will take over DNB. Industry insiders, speaking anonymously, revealed that the plan envisions private mobile network operators forming two separate consortiums: one acquiring ownership of DNB and the other deploying a distinct network, potentially involving a new technology partner, with Huawei from China being considered for a role in Malaysia’s 5G rollout.

Prime Minister Anwar Ibrahim’s administration in Malaysia is finalizing a complex deal with the country’s mobile network operators to facilitate the entry of a second operator in the 5G network rollout. The agreement, expected to be signed around Friday (Dec 1), aims to resolve a prolonged standoff between the government and private businesses. This development addresses a longstanding issue arising from Malaysia’s political uncertainties in recent years.

The proposed compromise plan involves multiple phases leading to the establishment of a second network operating alongside the state-owned Digital Nasional Bhd (DNB). Eventually, the private sector will take over DNB. Industry insiders, speaking anonymously, revealed that the plan envisions private mobile network operators forming two separate consortiums: one acquiring ownership of DNB and the other deploying a distinct network, potentially involving a new technology partner, with Huawei from China being considered for a role in Malaysia’s 5G rollout.

Communications and Digital Minister Fahmi Fadzli mentioned that a few details still needed clarification, and an agreement to resolve the 5G situation would be signed “very, very soon,” without specifying the exact timing.

The compromise plan for the significant economic initiative inherited by the Anwar administration, involving the establishment of a second 5G network alongside Digital Nasional Bhd (DNB), faces several challenges in the upcoming weeks and months, according to industry executives. They note that both the government and private telecommunications companies will need to make compromises for the plan to succeed.

The envisioned creation of a second 5G operator will involve a series of key steps. In the initial phase, Malaysia’s five operators will each contribute approximately RM350 million to DNB, which is currently in the process of deploying the 5G network. The combined fundraising of RM1.75 billion will serve as a pre-payment to DNB, granting access to its 5G network for the subsequent two to three years.

In the second phase of the comprehensive strategy, the five major mobile network operators (MNOs) in Malaysia—Maxis, the dominant player, the recently merged CelcomDigi, U Mobile (partly owned by Singapore’s Straits Mobile Investment Pte Ltd), YTL Communications, and Telekom Malaysia—will undertake a due diligence examination of Digital Nasional Bhd (DNB). Those familiar with the compromise plan highlighted that this due diligence phase is anticipated to last around six weeks. It will provide telco operators with insights into the cost structure of the state-owned company and its debt commitments.

The due diligence phase will additionally grant the opportunity to scrutinize the confidential contract between Digital Nasional Bhd (DNB) and Ericsson for the development of the 5G infrastructure. This examination will enable mobile network operators (MNOs) to decide whether to participate in the acquisition of DNB or be part of a consortium responsible for launching a new network.

According to the compromise plan, the anchor party obtaining rights for the new network rollout can commence infrastructure development only after DNB’s coverage reaches 80% of the nationally populated area, an increase from the current 73%. This approach allows DNB, having already invested significantly in its network rollout, to recover capital by leasing access to telcos before the second operator comes into play.