TNB likely to stick to its core business

Exposure to the fibre- broadband biz will be limited by leasing out its backbone fibre infrastructure


Tenaga Nasional Bhd (TNB) is expected to stick to its core business in power generation, transmission and distribution and limit its exposure to fibre-broadband business, according to MIDF Amanah Investment Bank Bhd.

In a research note issued last week, MIDF said the exposure to the fibre-broadband business will possibly be done by leasing out its backbone fibre infrastructure that can support last mile connection such as the extensive electrical pole network connection to homes.

“Given that the current fixed-broadband space is dominated by Telekom Malaysia Bhd (TM), TNB’s potential entry into the fray is likely to infuse meaningful competition.

“We understand that TNB does not intend to get into the last mile provision (as it will involve major capital expenditure and is not within TNB’s core business) and is open to partnership with third parties for this,” it said.

TNB has initiated a pilot project in Jasin, Melaka, to assess the technical, safety and commercial viability of using its electrical infrastructure for the government’s National Connectivity Plan.

The pilot project is targeted to be completed by year-end and will cover 1,100 out of 4,300 homes in three areas in Jasin including Taman Merbau, Taman Maju and Felda Kemendor.

MIDF said such a development is a step towards potential monetisation of TNB’s fibre assets, which are utilised for TNB’s supervisory control and data acquisition system.

“We understand that the fibre (in certain parts of TNB’s network) runs all the way to the substations.

“It is learnt that the network is currently under-utilised. However, it is still uncertain at this juncture whether TNB is required to inject further capital to upgrade the existing fibre infrastructure for it to be commercially viable,” it added.

Meanwhile, AmInvestment Bank Bhd said TM’s dominant position in the fixed broadband market is beginning to be encroached with TNB’s pilot project.

It added that TM and TNB had, in July, aborted a memorandum of understanding signed in January 2018 to jointly develop an implementation plan to deliver the government’s Nationwide Fiberisation Plan.

The collaboration was envisioned to capitalise on the combined strength of both company’s nationwide infrastructure and proven expertise, as well as capitalising on synergies to develop the most efficient cost structure which could have accelerated the fibre-broadband network reach.