Digital Nasional announces board members

by NUR HAZIQAH A MALEK / Pic by BLOOMBERG

DIGITAL Nasional Bhd (DNB) will be the special-purpose vehicle (SPV) that will roll out the country’s 5G network.

The Ministry of Finance (MoF) in a statement yesterday announced the appointment of the ministry’s secretary general Datuk Asri Hamidon as DNB chairman and Augustus Ralph Marshall, former director and CEO of Astro Holdings Sdn Bhd, as its CEO.

Other board members appointed include Datuk Seri Dr Yusof Ismail, who is also the DG of Malaysian Administrative Modernisation and Management Planning Unit, Datuk Mohamed Shahril Tarmizi and Datuk Muthanna Abdullah.

On Feb 22, Putrajaya announced that the distribution of the 5G spectrum would not be done through auction, but bought via an SPV wholly-owned by the MoF.

The government’s move is looking like a positive move for the telecommunication sector.

Maybank Investment Bank Bhd analyst Tan Chi Wei said although the SPV’s source of funds is unclear, the sector’s 5G capital expenditure (capex) would be absolved.

“Note that SPV’s monopoly applies only to 5G infrastructure. Telecommunication companies’ (telcos) prevailing holdings would remain intact, and they cannot repurpose their existing spectrum for 5G,” he said in a report last week.

The move by the government is expected to spell the absolving of telcos from 5G capex, in which Tan said the monetisation case was not great to begin with, which would alleviate near-term pressure on returns.

“Additionally, 5G deployment would likely boost demand for fibre, thus fixed-line players should benefit.

“The main risk in our view revolves around SPV’s ability to execute,” he said.

In a briefing recently, the regulator confirmed that the 100% government-owned SPV would be given the necessary spectrum to own, implement and manage the sole infrastructure for 10 years.

Operating via a wholesale model, telcos would be allowed to access the network, with rates and terms being regulated.

Telecommunication provider Celcom Axiata Bhd is supportive of the move as the digital economy blueprint does not only touch on infrastructure, but also application, digitalisation, government aspirations to digitise and cloudify the government and so on.

“We do see this as a great opportunity for us as well, but it’s a bit too early to make any adjustment to the capex or forecast implications to Celcom’s business operations,” said its CEO Mohamad Idham Nawawi.

In total, DNB is set to spend RM15 billion on new equipment and leasing of prevailing infrastructure that would be invested over 10 years, with capex being frontloaded, Tan noted.

5G services are targeted to be available selectively beginning end-2021. At present, the source of funds for the SPV is unclear, with the regulator ruling out the use of the Universal Service Provision funds, new taxes and direct injection from government coffers.

Tan sees fundraising through the capital market would require the SPV to be profit-oriented and might lead to elevated access fees.

“This goes against the data inclusion and nation-building objectives behind this deployment model. Further details would be revealed in due course,” he said.

Other risk factors for the research house’s earnings estimates, price targets and ratings fall upon competitive developments, such as price wars, as well as regulatory developments pertaining to taxation, product pricing and spectrum.

Meanwhile, at a 5G Advanced Summit recently hosted by the Global System for Mobile Communications Association during MWC Shanghai 2021, Dr Tong Wen, Huawei Wireless CTO and Huawei Fellow, emphasised the importance of collaboration between connection technologies to ensure industrial services are connected.

“Due to the lack of collaboration between the connection technologies of industrial services, the applications are often limited to just a single or several applications, far from a scaled effect. As a result, the market is worth just billions of US dollars,” he said.

He added that the continuous evolution of 5G will improve network capabilities and expand service scenarios, adding extra support for achieving the integration while reducing the cost of connections.