The Malaysia Government has established Digital Nasional Bhd (DNB), a Government of Malaysia Special Purpose Vehicle (GOMSPV) that would undertake the national 5G network rollout, costing RM15bil over the next 10 years.
Digital Nasional Bhd (DNB) is wholly owned and maintained by the Finance Ministry, regulated by the Malaysian Communications and Multimedia Commission (MCMC) in partnership with Telekom Malaysia Bhd (TM) and Huawei Technologies. DNB will offer 5G as a wholesale network service to other Telecommunication companies.
The RM15 billion allocation for 5G deployment by the Malaysia Government is now double the amount estimated by the National 5G Task Force chaired by Malaysian Communications and Multimedia Commission (MCMC) in 2019.
According to MCMC in its 5G report to former Minister of Communications and Multimedia Malaysia YB Gobind Singh Deo, the overall cost for a network upgrade to 5G by an existing Telco would be about RM7.5 billion, taking into account all other costs such as upgrading of the core network, radio and transport networks, IT systems, etc. “This is an estimation that the total number of 5G sites required to achieve 90% population coverage is approximately 10,000 sites on 3.5GHz 100MHz C-band. The Task Force’s high-level estimate assumes that a 5G radio can cost about RM510,000 per site including software.”
Established in 2018, the Malaysia 5G Task Force was formed to study and recommend a holistic strategy for 5G deployment in Malaysia. There were over 100 members including participation from all the major Telecommunication companies in Malaysia. No part of the final report suggested that the Government of Malaysia should roll out the 5G network by itself.
As of November 2020, the Global mobile Suppliers Association (GSA) reported that some 402 telecoms operators in 129 countries are investing in 5G networks in the form of tests, trials, pilots, planned and commercial deployments – where spectrum auctions are practiced in countries such as the United States (US), Finland, India, Canada, Norway, Poland, Spain, the United Kingdom, Sweden, and Germany. In the US, 5G spectrum auctions on the 24 GHz and 28 GHz bands raised more than $2.7 billion in gross bids, and the upper 37 GHz, 39 GHz, and 47 GHz bands made over $7.5 billion in net bids.
However, the now refreshed MCMC, under a new leadership claims that “the non-auction model adopted is part of the effort to not burden cost on a new network, in addition to ensuring that readily available network elements will be used and not laid new. The GOMSPV will be offering services via wholesale that is transparent and regulated. The service providers offering retails services will have an open, fair and equal access to the new network.”
Nationalising telecom network is not a new concept. Governments around the world have tried implementing single wholesale network (SWN) or wholesale open access network (WOAN), and failed.
According to a GSM Association (GSMA) report [PDF] in 2019, nationalized network models failed to take off in Kenya, Russia, Rwanda, Mexico and South Africa.
GSMA said, “Citizens are promised better coverage, more competition, and as a result, more affordable prices. However, turning this vision into a working reality with an impact that goes beyond what traditional networks can achieve is difficult.”
On Monday, the Finance Ministry announced the appointment of its ministry’s secretary-general Datuk Asri Hamidon as DNB chairman and Augustus Ralph Marshall, former director and CEO of Astro Holdings Sdn Bhd, as its CEO.
Augustus Ralph Marshall resigned as non-Executive Director of Maxis Bhd in July 2015 following a change in the nominee directors of Maxis Communications Bhd, the majority shareholder of Maxis.
In September 2016, a special 2G court in India issued non-bailable arrest warrants against billionaire Tan Sri T Ananda Krishnan and Marshall in connection with a phone-licence corruption investigation. Marshall was the deputy chairman at Ananda-controlled Astro All Asia plc at the time. There were also reports on allegations implicating Marshall over business matters in Indonesia in the past.
Augustus Ralph Marshall told StarBiz that the special-purpose vehicle (SPV) is expected to front load the investments, possibly investing 25% of the RM15bil in the first two years.
“Following that, about 15% to 20% will be spent in the next few years and the percentage will gradually drop in the following years.
“This is because once you complete building the infrastructure in the urban areas, then it becomes less intense (to rollout).
“The focus is to achieve a fast rollout and making sure we don’t compromise on 5G connectivity nationwide, ” he said.
Other DNB board members appointed include Datuk Seri Dr Yusof Ismail, who is the Director-General of the Malaysian Administrative Modernisation and Management Planning Unit (MAMPU), Datuk Mohamed Shahril Tarmizi and Dato’ Muthanna Abdullah.
Datuk Mohamed Shahril Tarmizi is the former Chairman and Chief Executive of the MCMC from 16 October 2011 to 31 December 2014. He is currently the Chairman of Bina Darulaman Berhad, an investment holding company controlled by the Kedah state government.
Apart from Bina Darulaman, Datuk Mohamed Shahril Tarmizi is also the Chairman and Independent Non-Executive Director of Opcom Holdings Berhad, a fibre optic company. Opcom is linked with Mukhriz Mahathir who is the co-founder of the company and son of former Prime Minister, Dr Mahathir Mohamad. Last month, Mukhriz Mahathir disposed a total of 24.6 million ordinary shares in Opcom Holdings Bhd, ceasing his position as a substantial shareholder of the company. Opcom was the centre of controversy in September 2019 over claims that the company would stand to benefit from a national plan to lay optical fibre cables across the country for Internet connections at much faster speeds.
Dato’ Muthanna Abdullah sits on the Board of Directors of Sapura Resources Berhad, IHH Healthcare Berhad, Malaysia Life Reinsurance Group Berhad (MLRe), MSM Malaysia Holdings Berhad, Malaysian Rating Corporation Berhad and MSIG Insurance (Malaysia) Berhad. He is also a member of Board of Trustees of Yayasan Siti Sapura and The Habitat Foundation.
MCMC said on Tuesday that Digital Nasional Bhd (DNB) will be licensed to operate under the Communications and Multimedia Act 1998 (CMA 1998). “As such, DNB would be subject to regulatory oversight of MCMC, just like any other licensee in the communications and multimedia industry, notwithstanding the fact that the entity is wholly owned by the Government. MCMC will regulate and monitor DNB via the relevant regulatory tools under the CMA 1998, to ensure, amongst others, optimum use of spectrum and that all telecommunications service providers will have open, fair and equal access in obtaining wholesale 5G network services for the development of retail services based on 5G technology,” it said [PDF].
Malaysia is now supposed to have 5G services available selectively beginning end-2021. Similarly, MCMC have said in the past that 5G will be availablle in Malaysia by the third quarter of 2020, but it was later changed to “beyond 2022” as part of a multi-billion national project called Jalinan Digital Negara Plan (JENDELA).
To date, major mobile Telecommunication companies have yet to comment and share more details regarding their latest 5G plans following the Government’s decision to not award the 5G spectrum in Malaysia.