This article appeared in SoyaCincau on 7 October 2022.

Digital Nasional Berhad (DNB) has announced that the four telcos – Celcom, Digi, YTL Communications and Telekom Malaysia have executed their share subscriptions agreements (SSAs) to take up equity stakes in the 5G single wholesale network. The four telcos will jointly get a 65% equity stake while the Ministry of Finance will hold 35% as well as a Golden Share.

Since Celcom and Digi are in the process of merging, both will hold a 12.5% stake each, while YTL and TM will get a 20% stake each. According to DNB, the government’s golden share will grant them various rights and privileges and covers areas such as ownership, sale, or transfer of shares on the part of the Government.

Under the SSA terms and agreed governance structure between parties, no single telco can hold more than a 20% shareholding in DNB. In the event of a merger, the merged entity cannot hold more than a 25% shareholding.

According to DNB, the execution of the agreements marks a positive development following extensive discussions between telcos and DNB. It added that the signed telcos will make 5G services available to their end users from October 2022 onwards.

DNB Chairman Datuk Seri Asri Hamidon said “I am pleased that the MNOs have taken up the equity offered by the Government and have executed their SSAs with DNB. All parties will now work towards completing the conditions precedent in the SSAs, including executing the Access Agreements as soon as possible. I expect that all parties will make every effort to deliver 5G availability to all their Malaysian and global roaming customers. The MNOs, in particular, have a crucial role to play in ensuring the accelerated adoption of 5G among end users. Over the longer term, they will be responsible for bringing to market a host of new 5G-enabled products and services which will have a positive impact on many businesses, be it small, medium or large, as well as Government.”

DNB says they have achieved 33% 5G population coverage and it aims to hit 40% by end of 2022. With an accelerated schedule, it aims of achieving its 80% 5G population target by the end of 2024. Commenting on the current development, Daruk Seri Asri says the testing and integration of 5G sites by the telcos have been progressing well and he believes they will be ready to provide 5G services to end-users located in areas where 5G infrastructure is currently available.

DNB’s 5G coverage areas currently cover the Klang Valley, and selected areas in Johor, Penang, Perak and Kelantan. During the tabling of Budget 2023, it was revealed that DNB will be spending RM1.3 billion next year to achieve 70% 5G population coverage. At the moment, Yes 5G remains the first and only telco to offer 5G services, while Celcom has started its 5G friendly user trial with selected customers.

According to the announcements on Bursa, TM has agreed to subscribe 100,000 shares for RM100,000 which has to be completed by 14 November 2022. DNB has also agreed to grant TM an additional 285,614,286 shares for a consideration of RM285,614,286. Meanwhile, Celcom and Digi will each subscribe 100,000 shares for RM100,000 and both telcos are also given the right to the allotment for an additional 178,471,429 shares for RM178,471,429. The announcements also mentioned that the SSA is conditional and is subject to the execution of the Access Agreement, being the commercial access agreement between the telcos and DNB for wholesale 5G services.

The latest announcement finally shows a movement in the local 5G scene after months of missed datelines. The equity deal was supposed to be sorted out by 31st August but Maxis and U Mobile decided not to proceed. Even without taking an equity stake, DNB has confirmed that other telcos are still able to offer 5G services if they sign separate 5G access agreements.