Malaysian operator U Mobile has won the rights to implement Malaysia’s second 5G network to compete with original 5G operator Digital Nasional Berhad (DNB), leaving rival contenders CelcomDigi and Maxis to rethink their 5G plans.
Under the Malaysian government’s dual-network model, only stakeholders in DNB were allowed to submit applications to establish a second 5G network operator. In August, U Mobile, CelcomDigi and Maxis – each of which own 16.28% of DNB as of June 2024 – submitted their applications to run the second network. YTL declined to participate, while Telekom Malaysia was disqualified after it dropped plans to take a stake in DNB in August.
The Malaysian Communications and Multimedia Commission (MCMC) broke the news on Friday that U Mobile was the winner. While the second 5G network will be run by a single operator (as opposed to DNB’s multi-stakeholder model), the MCMC said in a statement that U Mobile is allowed to collaborate with other telcos to roll out the network, “subject to the approval of MCMC”.
U Mobile said in a statement on Saturday that it is “excited to collaborate with various stakeholders, including MCMC and other telecommunications companies such as CelcomDigi and Telekom Malaysia to deliver world-class 5G-Advanced services to consumers.”
U Mobile also said it will reduce its foreign majority shareholding to 20%, “ensuring greater Malaysian control and inviting participation from local investors.” U Mobile’s biggest shareholder is Singapore-based Straits Mobile Investments (a subsidiary of ST Telemedia), which owns a 48.3% stake.
U Mobile will also have to sell its stake in DNB under the terms of its SSA in order to implement the second network.
The decision to go with U Mobile comes as a surprise to some industry observers who saw the telco as the underdog of the race. RHB Research and CIMB Securities issued statements in September rating Maxis as the likely front-runner for the second network.
Both CelcomDigi and Maxis issued statements on Sunday saying they will talk with various stakeholders to consider their next move. Both also reiterated that they thought their proposals should have won. Maxis went as far as to say it would “engage with MCMC to understand the rationale for their decision.”
CelcomDigi said that in the meantime, it will continue to focus on integrating its network, which it said is ahead of schedule and now 68% complete.
In any case, their respective 5G services will carry on as usual under the existing agreement with DNB. Both also have the option to buy U Mobile’s stake, although the MCMC has the final say on the outcome.