TM in talks with telecommunication operators for local 5G consortium

The consortium’s participants would share the required resources to roll out relevant infrastructure to support 5G


TELEKOM Malaysia Bhd (TM) is in talks with telecommunication companies (telcos) following the Malaysian Communications and Multimedia Commission’s (MCMC) plan to form a consortium to implement the 5G spectrum domestically.

MCMC, in a report titled “Allocation of Spectrum Bands for Mobile Broadband Service in Malaysia”, said it is considering allocating the 700MHz and 3.5GHz bands to a single entity comprising a consortium formed by multiple operators.

The consortium’s participants would share the required resources to roll out relevant infrastructure and provision relevant network services to support 5G.

“We are in discussion with all the operators. We have not come to a deal yet and are still talking to everybody, in fact almost every week, to find a solution to that,” TM group CEO Datuk Noor Kamarul Anuar Nuruddin said in a media briefing last Friday.

Among the first 5G frequency bands that MCMC will be rolling out, referred to as the “5G pioneer bands”, are 700MHz, 3.4GHz to 3.6GHz (3.5 GHz band) and 24.9GHz to 28.1GHz (26/28 GHz bands) bands.

MCMC said the specific criteria for the corporate structure of the consortium will be issued within the first quarter of 2020 (1Q20).

Commenting on the Covid-19 virus outbreak affecting the production of 5G hardware, Noor Kamarul said TM expects a minor impact to the transition in resources.

“I think we have a choice, we are not only sourcing the parts from China as there are other options such as South Korea. But for now, the easiest replacements are the Scandinavian countries.

“So far, we do have issues but they are not big. For example, we are currently buying fibres from Wuhan, China, among other countries. But if they cannot deliver, the others can,” he said.

Separately, the telco group is expecting a drop in its financial year 2020 (FY20) performance due to product pricing pressures amid a challenging market environment.

Noor Kamarul also said the group plans to reduce its capital expenditure (capex) allocation by 20% for FY20 as compared to RM1.36 billion it allocated in 2019.

“With the impact from product pricing, we foresee a tough year ahead in terms of revenue as we expect the growth to be between low-to mid-single-digit drops, although we are trying our best to make it flat.

“It will be a very competitive market, not just for TM, as the government continues to liberalise the market. We are pro consumers, but that puts a lot of pressure on our revenue,” he said.

For its FY19, TM recorded a quadruple growth net profit to RM632.6 million from RM153.15 million a year ago.

Its revenue for the year dropped 3.2% to RM11.43 billion from RM11.82 billion in FY18 due to the lower revenue from all the product lines except for data and non-telecommunication-related services.

The telco group posted a net loss of RM51.09 million in 4Q19, versus a net profit of RM69.66 million in 4Q18, due to lower revenue and fair value adjustment on medium-term notes issued by a subsidiary.

Revenue for the quarter fell marginally to RM3.03 billion from RM3.09 billion in 4Q18.

The company has declared a final interim single tier dividend of 10 sen payable on April 3. Its stock price closed six sen lower at RM3.82, giving it a market capitalisation of RM14.4 billion.