UOB Malaysia provides RM800mil loan to Ericsson for 5G rollout

28 October 2021

UOB Malaysia provides RM800mil loan to Ericsson for 5G rollout

This article appeared in New Straits Times on 28 October 2021.

KUALA LUMPUR: United Overseas Bank (Malaysia) Bhd (UOB Malaysia) has provided Ericsson (Malaysia) Sdn Bhd with a first tranche financing in the form of an RM800 million receivables purchase arrangement (RPA).

With the financing, Ericsson Malaysia will deliver the initial phases of Digital Nasional Bhd's (DNB) nationwide 5G network rollout.

UOB Malaysia has also been mandated as the lead arranger for an additional RM2.3 billion syndicated RPA for potential financial institutions (FIs).

Upon acceptance of the syndicated RPA by the participating FIs, a total of RM3.1 billion will be raised in support of the supply, delivery and management of DNB's entire 5G network.

UOB Malaysia deputy chief executive officer Ng Wei Wei said the bank is optimistic in DNB's 5G network rollout strategy, and this milestone project will have a long-term positive economic impact on the country.

"The financial arrangement will enable Ericsson Malaysia to meet its contractual obligation and support DNB's mandate to build, own and operate the national 5G network.

"This initiative has been identified as a key catalyst for Malaysia's digital economy aspirations," she said in a statement today.

DNB, an entity wholly owned by the Minister of Finance (Incorporated), has been mandated to undertake the accelerated deployment of 5G infrastructure and network nationwide.

As part of the agreement to supply, deliver and manage DNB's 5G network, Ericsson Malaysia is arranging the financing of network equipment from foreign and domestic financial institutions.

Ericsson Malaysia, Sri Lanka and Bangladesh head David Hägerbro said the early infusion of funding by UOB Malaysia provides a strong cash flow in the early phase of 5G network deployments in Malaysia.

"The launch of 5G in Malaysia will serve as an economic multiplier and accelerate the transformation of the country into a digitally empowered society and knowledge economy," he said.

The National 5G Network development is part of the MyDigital initiative, designed to develop and spur the country's digital economy by 2030 and serves as part of the government's aspirations to transform Malaysia into a digitally-driven, high-income nation.

DNB chief financial officer Nik Azlan Aziz said the agency looks forward to completing the balance syndicated RPA facility of RM2.3 billion, which, together with the first tranche of RM800 million, will form part of the estimated total working capital facilities of RM5 billion required by DNB until 2024 to roll out the planned 5G network.

"It is intended that a long term sukuk programme will replace these facilities for which DNB has received strong indications of interest by potential lenders," he said.

The 5G network and infrastructure deployment are expected to yield a RM100 billion gross domestic product uplift and a creation of 100,000 new jobs over the next 10 years.

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