A DUAL wholesale network (DWN) model while not inconceivable would invoke more challenges (especially when roll-out has begun), delay 5G execution, and contribute to excess capacity in the long-run.
Moreover, Digital Nasional Bhd (DNB) – the driver behind Malaysia’s development of 5G infrastructure – asserts that the proposed consortium model is not new and has been previously mooted (under the Pakatan Harapan Government) with mobile network operators (MNOs) unable to agree on the operating model and strategic objectives.
“A DWN would also negate DNB’s strategic supply-driven model/mandate resulting in potentially higher cost to serve (as traffic and revenue will be shared),” noted RHB Research analyst Jeffrey Tan in a telecommunications sector update.
“A consortium wholesale network, it believes, would also contravene the current regulatory framework as MNOs will also offer 5G retail services. The Government had previously stated that it would make a decision on the SWN (single wholesale network) this month.”
Under a cost recovery model, the wholesale pricing would see MNO’s committing to a minimum coverage capacity (1,200Gbps) as a pre-requisite. Additional capacity demand (beyond the coverage commitment) would be on a pay-per-use (PPU) at a lower price.
“DNB contends that the initial coverage capacity (7,509 sites) would translate into a steady state outlay of RM36 mil per month per telco (RM432 mil per annum or RM3.4 bil over 10 years),” RHB Research pointed out.
“This works out to a blended price/cost per GB of 13 sen (based on RM30,000 per Gbps per month). The outlay would be significantly lower than the cumulative RM7-9 bil capex that the MNOs would need to invest on their own, individually (without the SWN) into FY2030 as per DNB’s estimates.”
DNB is hopeful that the four MNOs – Celcom Axiata Bhd, Digi.Com Bhd, Maxis Bhd, and U Mobile Sdn Bhd – will soon ink their 5G wholesale agreements.
Thus far, Telekom Malaysia Bhd (unifi Mobile) and YTL Communications Sdn Bhd (YES) are the first two operators in the country to provide 5G access to their respective customers within coverage areas of Putrajaya, Cyberjaya dan Kuala Lumpur.
This follows numerous engagements and adjustments made to commercial terms within the reference access offer (RAO) to be published by February.
Aside from earlier pushbacks on pricing and the duration of the wholesale contract (10 years), DNB is of the view that the ‘decision’ ultimately boils down to MNOs having to come to terms with the need to relinquish control over their networks with the focus turning to innovative products, services and solutions.
MNOs now have the option to sign on a five-year agreement with the option for another five-year renewal.
“With MNOs granted the flexibility to invest in their own core network via MCMC’s new access list (published on 15 Dec 2021), we believe they can still look to roll out unique and differentiated offerings (more so within the enterprise segment) with the application of network slicing (a feature within a 5G core network) and control their customer journey and relationships,” opined RHB Research.
All-in-all, the research house maintained its “neutral” stance on the sector with Telekom Malaysia, Axiata Group Bhd and OCK Group Bhd as its top picks. – Jan 24, 2022
Pic credit: Reuters
