AMID concerns from operators over its pricing plans, the latest move by Digital Nasional Bhd (DNB) to offer wholesale 5G services to mobile carriers at no cost during an initial roll-out phase slated for next week has raised eyebrows.
This news, along with Saturday’s (Dec 4) news of Telekom Malaysia Bhd conducting 5G trials with DNB suggest that there could some progress in the negotiations of DNB with the telcos, according to Kenanga Research.
“DNB’s announcement of free 5G wholesale services for 1Q CY2022 caught us by surprise and we think there are three ways to interpret this,” opined analyst Jim Lim Khai Xhiang in a commentary.
The three likely scenarios are:
- DNB could be incentivising the telcos to use the network to prove that the multi-operator core network (MOCN) is technically feasible and/or to address any technical issues;
- DNB has had to resort to such measure in order to get the telcos on-board the single wholesale network (SWN) in order to achieve some 5G rollout targets as it is a possibility that the telcos are withholding their 5G rollout to achieve terms in their favour; and
- DNB through its free service period is holding itself out to the public that it is a non-profit entity.
“Nevertheless, we are mildly positive on this news, mainly as it signals progress in negotiations and DNB’s willingness to compromise in wholesale pricing,” noted Kenanga Research.
“That said, we remain most concerned about the telcos’ inability to differentiate in retail offerings and reduced differentiation in enterprise services, mainly due to a lack of control over the network.”
Moreover, Kenanga Research remains cautious on further delays in negotiations between DNB and the telcos which would further delay 5G use-cases deployment and earnings accretion.
In a statement yesterday (Dec 6), DNB said 5G services will be commercially available from Dec 15 in three central areas, including Cyberjaya, Putrajaya and parts of the capital Kuala Lumpur.
The agency said it would provide 5G services at no cost to all operators integrated into its network between now and March 31 as it seeks to finalise its wholesale agreements with carriers. DNB has said it hopes to sign long-term contracts in early 2022.
Kenanga Research maintained its “neutral” outlook on the prospect of Malaysia’s telco sector. – Dec 7, 2021
