Malaysia 5G Dual Network Landscape

Introduction

Established in March 2021, Digital Nasional Berhad (DNB) was tasked with rolling out Malaysia's first nationwide 5G infrastructure across both urban and rural areas.

  • This infrastructure was designed to be leased to mobile network operators (MNOs) under a Single Wholesale Network (SWN) model.
  • The primary goal of the SWN was to accelerate the nation's digital transformation by reducing overall capital investment costs and preventing the duplication of network infrastructure.
  • Under this model, DNB built the infrastructure, and telecommunications companies purchased wholesale access.
Despite the promise of lower access costs, major telcos were initially reluctant to accept DNB's 5G access offer. Their reservations stemmed from several key factors:
  • Prices were locked for a 10-year period with no provision for reduction.
  • Telcos feared that if network costs increased, the established 5G pricing structure would be insufficient to support future growth.
  • There were concerns that "renting" capacity from DNB might ultimately cost more over time than building and operating their own independent 5G networks.
  • Telcos harbored concerns that DNB could eventually bypass them and compete directly in the retail market.



The Conflict

Today, with Malaysia having achieved approximately 80% 5G population coverage, the government has decided to transition to a dual-network model.

  • This shift aims to increase competition and enhance resilience within the national 5G ecosystem.

On 1 November 2024, the Malaysian Communications and Multimedia Commission (MCMC) announced that U Mobile Sdn Bhd would implement Malaysia's second 5G network.

  • This selection was based on comprehensive criteria, including technical and business plans, complaint records, customer satisfaction and overall track record in infrastructure projects.

By early 2026, the structural landscape shifted dramatically:

  • Government Exit: The Ministry of Finance exercised its put option to fully exit its DNB shareholding. This compelled CelcomDigi, Maxis and YTL Power - the three remaining shareholder telcos - to acquire the government's stake at approximately RM327.9 million each.
  • TM's Withdrawal: On 25 February 2026, Telekom Malaysia (TM) announced plans to terminate its existing 5G wholesale access agreement with DNB. TM signaled its intent to access 5G services through U Mobile's newly established network instead.
  • DNB's Pushback: DNB rejected TM's termination notice, insisting that the long-term access agreement remains valid, binding, and enforceable until October 2032. The final decision regarding this termination now hinges on regulatory consent from the MCMC.

TM's potential withdrawal threatens to exacerbate the financial pressure on DNB, which remains unprofitable despite a recent surge in revenue.

  • According to DNB's available financial statements, the entity recorded net losses of RM1.2 billion in both 2023 and 2024, even as revenue jumped from RM49.23 million in 2023 to RM341.17 million in 2024.
  • The loss of TM's estimated RM35 million annual contribution would be a significant blow. This shifts a severe financial burden onto the remaining shareholders - CelcomDigi, Maxis and YTL Power - who must now absorb DNB's annual losses while strategizing to make the network profitable.
  • Currently, DNB is collaborating with its shareholder telcos and external consultants to ensure its long-term sustainability. This involves updating its business, funding and operational models through aggressive cost-optimization strategies.

Conversely, securing TM represents a landmark commercial victory for U Mobile, which recently secured RM4.3 billion in financing from major banks to support its next-generation 5G deployment.



Summary

Malaysia’s transition to a dual 5G network model is premised on the logic that infrastructure competition will drive better service quality, competitive pricing and faster technological deployment.

  • However, this transition is proving complex and contentious as access seekers begin switching providers.

The MCMC must carefully manage this landscape to ensure both networks can coexist operationally during the handover period.

  • Given DNB's transition from a government-backed utility to a private joint venture, regulatory frameworks must adapt.
  • The MCMC should consider relaxing rigid pricing controls, allowing DNB to charge a premium tier to non-shareholder telcos. This flexibility is necessary to make DNB profitable and competitive.
  • Commercially, it is unviable to allow non-investing telcos to access 5G at subsidized rates while the shareholder telcos bear the entirety of the financial risk and operational losses.

Furthermore, because 5G network usage fluctuates, DNB's financial continuity may require a structural shift from usage-based billing to fixed minimum fees payable by access seekers, ensuring a predictable baseline revenue stream.



External Links

Comments

Post a Comment