Malaysia’s four major cellcos reported to be seeking majority stake in DNB

20 May 2022

Malaysia’s four major mobile communications providers – Celcom Axiata, DiGi Telecommunications, Maxis and U-Mobile – are reported to be seeking a majority stake in Digital Nasional Berhad (DNB), the state-owned special purpose vehicle which is overseeing the rollout of the country’s sole 5G network. According to Reuters, which cites a letter sent by the firms to the Ministry of Finance (MoF), the four mobile network operators (MNOs) countered a proposal by the government which had offered them a minority stake in DNB. Further, they are also said to have called for a review of the pricing model and network access plan offered by the agency, according to the letter dated 9 May seen by the news agency.

Objections to the government’s proposal were reported to have come after it had offered a stake of up to 70% of DNB, but with this to be split among a wider group of companies; it is understood that a total of nine firms had been invited to participate in the stake sale, which would have meant the four big players taking only a combined minority stake. In the letter to the ministry the MNOs were reported to have said: ‘We would not be able to justify a passive minority investment in this venture without being able to exercise influence and control to safeguard our investment.’ Further, the letter was cited as saying: ‘The MoF-proposed role as minority shareholders does not appear to make it feasible for any of us to add value as shareholders and is not commensurate to our contribution to the industry, or our duty to our shareholders and customers.’ While Celcom, DiGi, Maxi and U-Mobile have indicated that they are still willing to explore the government’s proposal, they have suggested that a combined stake of 51% for them would be the ‘most viable to reach an agreement’.

Meanwhile, a further possible complication to Malaysia’s 5G plans is said to be an impasse between DNB and the four major players over pricing and transparency, with concerns having been raised that a sole state-run network could result in a nationalised monopoly. To that end, Reuters notes that the four carriers’ letter called for a review of DNB’s ‘Reference Access Offer’ (RAO), which was published last month and set out pricing, service commitments and other details of the 5G wholesale model. According to the four big cellcos, the current model offered in the RAO is ‘not commercially viable’ and could lead to higher costs for customers and slower adoption rates. ‘The absence of complete transparency on DNB’s rate of return and the linkage with the pricing arrangements in the RAO raises governance questions … which will have a material impact on the affordability of 5G access,’ the letter said.