WHILE greater involvement by telcos in the Digital Nasional Bhd’s (DNB) 5G roll-out could provide mobile network operators (MNOs) with marginally more control over the network, the ideal scenario would still be one where each telco owns and controls its own networks using its spectrum.

Such is the stance of Kenanga Research which believes that complex structures and prolonged negotiations could further delay network deployment, exacerbating existing concerns around the industry.

As Reuters reported yesterday, it is rumored that the telcos (i) recommended that the Government allow two wholesale 5G networks where the consortia will “commence the two networks in parallel next year and separate them from 2023”; and (ii) are open to an equity stake in DNB for greater inclusion in the Government’s roll-out plans.

“While we think that the MNOs’ potentially greater involvement alleviates some problems around lack of competition and network control, the continued uncertainty and potentially undesirable operating environment dampen the MNOs’ prospects,” opined analyst Lim Khai Xhiang in a telecommunications sector update.

For Malaysia to achieve the Government’s ambition to be a regional leader in the digital economy, Kenanga Research said a speedy 5G deployment and adoption is imminent.

“However, Malaysia currently lags behind peers. Thailand’s AIS (Advanced Info Service) has launched 5G in February 2020 and Singapore continues to increase its 5G coverage,” observed the research house.

“South Korea, Japan, China and Taiwan already have strong 5G coverage and adoption with SK Telecom already moving beyond connectivity to explore the Metaverse. Further roll-out delays may leave Malaysia further behind its regional peers.”

In addition to the uncertainty around the 5G network roll-out structure, there continues to be uncertainty in the technical capabilities of the single wholesale network (SWN) and the potential uses for the telcos, according to Kenanga Research.

“Specifically, there has yet to be clarity on commercial terms and technical capabilities regarding the advanced 5G services for enterprises such as on private networks,” the research house pointed out.

In fact, industry experts and veterans at the recent GSMA webinar have raised questions about how such arrangements would operate along the SWN. With uncertainties abound, telcos have less incentive to innovate and consequentially may forgo new revenue streams from 5G use cases.

All-in-all, Kenanga Reseaerch maintained its “neutral” call on the telecommunications sector with an “underperform” rating on both Maxis Bhd and DiGi.com Bhd.

“We came away from GSMA’s webinar reaffirmed of our view that the SWN could cause MNOs to lose out on new revenue streams from 5G use cases,” asserted the research house.

“The reportedly proposed second wholesale 5G network suggests that the MNOs may have an increasing say in the network deployment and structure but we continue to remain cautious on the MNOs.” – Dec 15, 2021