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Fahmi's statement on 5 telcos joining DNB raises questions

KUALA LUMPUR: Communications and Digital Minister Fahmi Fadzil's announcement on five telcos agreeing to take up interests in Digital Nasional Bhd (DNB) has raised more questions than provided answers.

This comes less than three months after CelcomDigi, and Telekom Malaysia Bhd (TM) backed out of a October 2022 deal to take interests in DNB following an announcement of a dual wholesale 5G network by the minister.

Fahmi said on Friday CelcomDigi, Maxis, Telekom Malaysia, U-Mobile and YTL Communications have agreed to take up equity interest in DNB along with 5G access agreements. He added that the telecommunication companies are in the process of subscribing to shares in DNB.

An industry observer said little information was revealed regarding the new development and emphasised that there are a lot of details that the telco have to iron out before taking up a stake in DNB. The person said it is likely there will be some changes in the terms and conditions set upon the agreement to the shareholding.

"I'm assuming the amount of equity would be smaller and some of the conditions have changed since the last agreement that they had, especially for CelcomDigi," the industry observer said.

Another industry observer who declined to be named said for the long term outlook, there are a lot of issues and details that need to be clarified and straightened out especially for when 5G coverage reaches the 80 per cent of the country's population milestone.

As of June 30, 2023, DNB has achieved 64.7 per cent of 5G infrastructure rollout for populated areas.

"These five telcos are possibly going to be bidding or join in as a consortium to become the second entity to provide the 5G network in the country. "When that happens, what will be the fate of their share in DNB? Who will they sell the equity to? And if the telcos decide to sell it back to DNB, how much will it be valued? What if there is a delay in the roll out this year?," the expert said.

Meanwhile, Malaysian Institute of Economic Research economist Dr Shankaran Nambiar said the entry of the five telcos in the 5G state agency will facilitate and hasten DNB to achieve its 80 per cent target even before the end of the year. "This will herald a speedier prelude to the rollout plan that will kick-in next year and we can expect to see DNB achieve its target better," he said.

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