KUALA LUMPUR: Digital Nasional Bhd (DNB) contends that a dual wholesale network (DWN) model backed by mobile network operators (MNOs), while not inconceivable, will pose more challenges especially when the national 5G rollout has already begun.
DWN would delay 5G execution, contribute to excess capacity in the long-run and cost more to the network operators, DNB told analysts at a recent meeting.
MNOs are estimated to spend RM3.4 billion each over 10 years under DNB's single wholesale network (SWN) model, significantly lower than the cumulative RM7 billion to RM9 billion outlay that they may need to invest individually via DWN over the period.
The government is expected to decide on the final distribution model for 5G network next week. although DNB has been mandated to handle the 5G deployment nationwide.
RHB Reseach analyst Jeffrey Tan, who attended the meeting, said DNB had asserted that the consortium (DWN) model proposed was not new and previously mooted under the Pakatan Harapan government with MNOs unable to agree on the operating model and strategic objectives.
"A DWN would also negate DNB's strategic supply-driven model/mandate resulting in potentially higher cost to serve (as traffic and revenue will be shared). A consortium wholesale network, it believes, would also contravene the current regulatory framework as MNOs will also offer 5G retail services," Tan said.
He said under DNB's cost recovery (SWN) model, the wholesale pricing would see MNOs committing to a minimum coverage capacity of 1,200 gigabytes per second (Gbps) as a prerequisite.
Additional capacity demand will be on a pay-per-use (PPU) at a lower price.
"DNB contends that the initial coverage capacity (7,509 sites) would translate into a steady state outlay of RM36 million per month per telco (RM432 million per annum or RM3.4 billion over 10 years). This works out to a blended price/cost per GB of 13 sen (based on RM30,000 per Gbps per month).
"The outlay would be significantly lower than the cumulative RM7 billion to RM9 billion capital expenditure that the MNOs would need to invest on their own, individually (without the SWN) into financial year 2030 as per DNB's estimates," Tan said.
He said DNB was hopeful that the four other big MNOs (Axiata Group Bhd, Digi.Com Bhd, Maxis Bhd and Berjaya Group's U Mobile) would ink 5G wholesale agreements, joining Telekom Malaysia Bhd and YTL Corp Bhd as the first movers.
This followed numerous engagements and adjustments made to commercial terms within the reference access offer, which would be published by February.
"Aside from earlier pushbacks on pricing and the duration of the wholesale contract (10 years), DNB is of the view that the decision ultimately boils down to MNOs having to come to terms with the need to relinquish control over their networks, with the focus turning to innovative products, services and solutions.
"MNOs now have the option to sign on a five-year agreement with the option for another five-year renewal."
Tan, nevertheless, added that with MNOs granted the flexibility to invest in their own core network via MCMC's new access list, they can still looked to roll out unique and differentiated offerings (more so within the enterprise segment) with the application of network slicing (a feature within a 5G core network) and control their customer journey and relationships.