DIGITAL Nasional Bhd today said it was in discussions with the national regulator and telcos to determine the final terms and conditions for the rollout of the 5G network in Malaysia, denying a Reuters report highlighting serious telco reservations over the government’s plans.

This came as the government plans to launch the network in Kuala Lumpur, Putrajaya and Cyberjaya next month.

The report said DNB also confirmed that no agreement has been reached with carriers, acknowledging that its initial timeline for negotiations was “too optimistic”.

“We refer to the recent article by Reuters on the 5G rollout in Malaysia, to be provided by DNB through a single shared infrastructure as opposed to enabling mobile network operators to bid and rollout multiple infrastructures,” it said.

“Although DNB facilitated a detailed interview with senior management, unfortunately, Reuters elected to ignore facts presented and instead, regretfully, presented an inaccurate and lop-sided view.

“Yes, it is correct that no telco has yet signed up,” the statement said, adding that the company explained that typically, a reference access offer (RAO) has to be published in accordance with the mandatory standards of access.

According to DNB, the offer for 5G wholesale services has been drafted, and has been shared with Malaysian Communications and Multimedia Commission and key industry players in September for their feedback.

“DNB has since then been in discussions with MCMC and the telcos to align around the final terms and conditions,” it said.

The offer will form the basis for DNB to enter into commercial agreements, the company said, adding that offers would not be finalised until the end of November.

Following that, DNB said it will begin commercial negotiations with the telcos.

“It is thus clear that DNB has not sought any sign-up and neither expects the operators to sign anything until after the offer is published,” it said.

DNB maintained that its costing structure was beneficial to the 5G carriers, saying it significantly lower than the cost to generate their own networks as it involved a shared infrastructure.

“Incremental or marginal cost per GB of 4G of the telcos currently is at least RM0.50. We believe the cost per GB of 5G from DNB, which has been communicated to the telcos, is significantly lower than the cost to generate on their own networks,” it said.

“The third point made in the report, which has unfortunately been widely circulated by those with vested interests, is that the telcos will become less profitable if they must buy from DNB and consequently, their stock prices will decline and result in a loss of RM45 billion in market capitalisation,” it said.

DNB stuck with its argument in the Reuters report that the telcos’ stock performance had not diminished since its announcement earlier this year, which the company said was “clear” that investors disagreed with the telcos assessment.

DNB went on to say that its lower cost of 5G services should instead lead to higher net earnings and therefore, translate to a higher stock price for these telcos.

“Despite vested industry assertions of lower profits, it has not been mentioned that the government has had to budget an additional RM28 billion of public and private money under the Jendela initiative to connect to less urban places, for which profit-driven operators have failed to provide.

DNB accused the telcos of taking seven years to reach more than 80% 4G coverage in populated areas.

“On the other hand, DNB targets to roll out 5G to more than 80% of coverage in populated areas by 2024,” it said.

DNB is a special purpose vehicle under the Ministry of Finance, set up to roll out the 5G network. The ministry has previously said that DNB will finance the rollout at a cost of RM11 billion through market financing, therefore it is not a beneficiary of government funding. – November 11, 2021.