The govt is expected to make the announcement today on the business model they will opt in for the roll-out 

by ASILA JALIL / Pic by BLOOMBERG

THE Ministry of Finance (MoF) is expected to announce today the business model the government will opt in for the roll-out of the 5G infrastructure in the country, according to people from the Malaysian Communications and Multimedia Commission. 

Putrajaya has proposed a single wholesale network (SWN) model under Digital Nasional Bhd (DNB) with telecommunication companies (telcos) may need to pay upfront wholesale fees to DNB. 

Telcos have proposed a dual wholesale network (DWN) model. 

The Cabinet’s decision was supposed to have been announced in January based on news reports quoting Communications and Multimedia Minister Tan Sri Annuar Musa. 

Regardless of the business model, analysts believe it would take time for telcos to monetise 5G services. 

PublicInvest Research said the DWN model’s high capital expenditure cost in 5G deployment would translate to higher depreciation, spectrum, maintenance costs and etc. 

“In terms of adoption rate, it is likely to be slow,” it said in a note yesterday. 

The proliferation of the IR4.0 and the Internet of Things would mean that devices and lifestyle will be connected through 5G.

“With 5G, bandwidth will expand, latency will reduce and thus, increase the reliability, security and quality of services. 

“However, for 5G to make business sense, a complete ecosystem is required. At this juncture, the required ecosystem is still lacking,” it added. 

The SWN model has failed to gain support from existing mobile network operators (MNOs) due to the potential loss of control of the rollout, spectrum ownership and lower profitability. 

Telcos have called for a second 5G provider to create a more competitive business model and ensure continuous investment and innovation of products and services. 

“Our take is that the DWN will be favoured over SWN to garner support from incumbents and to avoid further delays to 5G rollout as the availability of high-speed and reliable Internet connection is critical for digital transformation in driving Malaysia’s future economic growth,” said the research firm. 

The firm retained a ‘Neutral’ recommendation on the telecommunication sectors given limited avenues to monetise on 5G services in the early years of deployment. 

“Telekom Malaysia Bhd remains our top pick as we believe it should benefit from the growing demand for fibre leasing and data centre solutions in Malaysia,” it said. 

The research firm added that although the SWN model may solve issues with urban-rural divide as it could accelerate deployment of 5G into semi-urban and rural areas, this agenda may not necessarily be acceptable to its investors, which the government has yet to identify at this stage. 

As the MoF had previously stated that the implementation of 5G through DNB will not involve public funds, there could still be risks that DNB may not be able to invest heavily in these unprofitable areas if it involves private funds, it said. 

“Under the DWN model, conditions for the award of 5G spectrum can be imposed on the MNOs, compelling them to invest in the rural areas. 

“Currently, the MNOs have already pledged to support the Jendela initiatives to improve and enhance nationwide connectivity,” it added.