RECENTLY, the communications and multimedia minister said only two mobile network operators (MNOs), namely, Telekom Malaysia Bhd (TM) and YTL Communications Sdn Bhd, have signed an agreement to own equity stake in Digital Nasional Bhd (DNB) for the implementation of a 5G network in the country with a June 30 deadline.

What would happen to those MNOs who didn’t sign up by the said deadline or declined to sign up at all?

Did anyone ever ask the real question? Whether the MNOs want to implement 5G at any costs? A majority of these MNOs are listed on Bursa Malaysia, meaning they have performance metrics to meet and deliver to their shareholders. If the implementation model for 5G does not make economic and business sense to them, would they want to push through and implement and incur the wrath of their public and institutional shareholders?

As it is presently, the government, through DNB, owns the spectrum and the equipment where Ericsson will implement and install the equipment required to put the 5G services in operation.

The original aim was for the government to offer wholesale services to all MNOs in the country. And it is the general assumption of all that every MNO wants to implement 5G, regardless.

The government or DNB does not have subscribers it can directly sell 5G services to, so even if it wishes to sell 5G services directly to individuals or business enterprises, it cannot do so unless it invests as an MNO.

The other option is unless it privatises Telekom Bhd, which is a company listed on Bursa Malaysia and is thus subject to transparent rules of governance and investing that has international institutional investors investing in it over the years, and use that infrastructure to roll out 5G services directly to individuals and enterprises.

What if the other MNOs decided and declined to invest in DNB? Would they be penalised or are charged higher when they purchase wholesale from DNB?

Since TM and YTL Communications would be purchasing from DNB, does this mean they would have discounted or preferential rates and treatment in terms of services and deliverables since they are also shareholders of DNB?

Would DNB, with Telekom and YTL as shareholders, guarantee other, non-shareholder MNOs that services to them would be on par if not above the capacity they themselves are receiving from DNB? Remember how TM “crowded out” and suffocated Jaring, the first internet service provider in the country, until it had to shut down? People in the telecommunications industry long enough would be able to share and confirm this sad episode.

TM and the parent company of YTL are both listed on Bursa Malaysia and again are subject to governance and listing requirements of the stock market i.e both have return on investment metrics and are to deliver results to

their shareholders comprising individuals from the public and institutional investors. These investors are not going to be kind to both companies if the investments they plough into DNB is a not for profit venture.

Those MNOs who have yet to take up an equity offer from the government to participate in DNB have entered a partnership with either Huawei, ZTE or Ericsson in preparation of their 5G roll-outs way before the government decides to implement 5G via a single wholesale network (SWN) model. Only TM and YTL did not announce any partnership.

On this basis, it make sense for TM and YTL to participate in DNB, but the others do not, as they have to answer to their public shareholders as to how they account for the commitment they have entered with their partners to provide 5G services before the government decides not to award any spectrum in 5G to the MNOs, but through the SWN model.

What if these MNOs decide not to purchase the wholesale package from DNB for reasons other than pricing?

These MNOs could decide to invest in, upgrade and improve their 4G services for their clients, both individuals and enterprises, for the time being.

For these MNOs, the 5G spectrum is nice to have but not a must-have at the current juncture. With the way technology advances, 6G might hit the market sooner or even within the next two years. Thus, logically, it might not make sense for them to invest and co-own a 5G network now for there is always a possibility that by the time they roll out the service in Malaysia, 6G would have made itself available for use commercially.

Their existing clients are not pressuring these MNOs to provide them with 5G services as they know full well that any upgrade to 5G services also means they have to upgrade their equipment and devices to 5G capabilities immediately, or else they would not be able to enjoy the speed and agility of 5G, and nor would their existing clients terminate their existing subscriptions en masse and migrate to another MNO if their own MNO does not provide them with 5G services.

For the country, 5G is a must-have if we hope to compete against our neighbours in every aspect from education to health to economy and industry. The country needs to have 5G implemented as quickly and as widely as possible. As it is now, the country is already lagging behind our immediate neighbours, especially in the 5G roll-out.

Between the country that must have 5G implemented and the MNOs that have the option of nice-to-have-but-not-necessary-to-have for 5G in their business arsenal, does the government really have a choice?

What if these MNOs, which take up and provide mobile and internet services to more than 75% of the total population and business enterprises in the country, decide to wait out and not implement 5G services based on the DNB model?

The government would then have a lot to answer to the rakyat on why the country is falling further behind in its economic development.

It will be a monumental mistake if the government believes it can proceed to implement 5G in the country without the unconditional and full support of all other MNOs. Without the distribution outlets from the MNOs, the 5G spectrum owned by the government is only worth the paper it is stated on.

The ball is in the government’s court for it to come down from its high tower and negotiate sincerely with MNOs.

You own the oil wells producing oil. Without the petrol stations selling it, it won’t reach the car owners on the road.

Unless you deliver your oil in tankers and sell it on the roadside to car owners, you need to incur costs to store the excess and unsold oil. The onus is for the government to think sensibly and act rationally. – May 11, 2022.

* FLK reads The Malaysian Insight.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.