I refer to a Channels News Asia report that was published on the 30th of November 2023 entitled “Malaysia’s telcos set to agree ‘compromise’ deal with government, ending face-off over a second 5G operator”.[1] I take note that this report did not attempt to source any response from any official government sources and that the information from this report was almost exclusively taken from sources from the telco industry. I also take note that while the report referenced the cases in other countries where the rollout of the single wholesale network (SWN) model was “best by rollout delays and low mobile broadband penetration”, there was not mention of the excellent record of DNB to rollout 5G in Malaysia via Ericsson, the main 5G network equipment provider, which has catapulted Malaysia to a top 3 global ranking position in terms of 5G speeds and increased 4G speeds as traffic is being offloaded to the 5G network, according to Ookla.[2]
In signing any shareholder agreement with the telcos on the ownership of DNB, the Ministry of Communications and Digital (MCD) and the Ministry of Finance (MOF), which is the 100% owner of DNB, must take into account of the following items as a way to protect public interest:
- The government must hold on to its “golden” share in DNB which allows it to make crucial decisions on certain issues involving DNB such as decisions to change the share ownership structure or to sell DNB to another party or set of parties. This is to ensure that the assets and structure of DNB are protected and not, for example, sold to other private sector entities for the telcos who will become DNB shareholders to profit from;
- The government must be able to appoint the chairman of DNB and must have veto power over the appointment of the CEO. At a time when there has been so much uncertainty over the direction and survival of DNB as an entity, these powers are necessary in order to ensure the ability of DNB to survive as a going concern and not utilised by the telcos for their own private interests. For example, if the government did not have these powers, the telcos (or a group of telcos with a majority stake in DNB), may appoint a chairman and CEO who may change the terms of the Reference Access Offer (RAO)[3] to decrease the telcos payments to DNB which may jeopardize the maintenance and further enhancement of the 5G network;
- There must be strict controls over the allocation and possible disposal of 5G assets currently owned by DNB. This is so that the telcos cannot reallocate the existing 5G infrastructure to benefit their own network rather than to allow DNB to focus on maximizing the operational efficiency of the ENTIRE 5G network;
- Finally, there should be proper due diligence and a detailed business plan, evaluated by the Malaysian Communications and Multimedia Commission (MCMC) as provided under the Communications and Multimedia Act 1998 (Act 588), on a possible second network, including the financing and rollout plans, AND the impacts on the existing 5G network, including any financial implications to the Ministry of Finance (MOF) via its exposure to DNB.
There should not be a rush to sign the shareholder agreement for DNB if the government’s and the public’s interest cannot be guaranteed as per the points mentioned above.
My fear is that without proper safeguards, we will surely move to a situation where government oversight and public interest in DNB’s single wholesale network (SWN) is replaced by a private duopoly control over the 5G network where shareholder returns are prioritized above all else and public interest is deprioritized.