Photo by Low Yen Yeing/The Edge

KUALA LUMPUR (Nov 7): The selection of U Mobile Sdn Bhd to implement Malaysia's second 5G network does not contradict the equity requirements under the network facility provider (NFP) and network service provider (NSP) licences, said Communications Minister Fahmi Fadzil.

Under the NFP and NSP licences, foreign equity is capped at 49%, and Bumiputera ownership must be at least 30%, Fahmi noted, adding that U Mobile’s current foreign equity holdings remain within the compliance scope of the licences' special conditions.

"U Mobile has also committed to reducing foreign ownership to 20% to ensure greater control by local investors. Therefore, the selection of U Mobile does not contradict the special licence conditions," Fahmi told the Dewan Rakyat during ministerial question time on Thursday.

On Nov 1, the Malaysian Communications and Multimedia Commission (MCMC) announced that U Mobile had been selected to implement Malaysia's second 5G network.

The announcement came as a surprise, as U Mobile is relatively smaller than other mobile network operators like Maxis Bhd (KL:MAXIS) and CelcomDigi Bhd (KL:CDB) in terms of the subscriber base and financial strength.

Several parties also questioned if this decision would benefit foreign investors, as U Mobile’s largest shareholder is Straits Mobile Investments Pte Ltd, linked to Singapore's Temasek Holdings, which currently holds a 48.26% stake.

Fahmi emphasised that the selection process was fully managed by the MCMC, and clarified that it was conducted through a "beauty contest" process, not a direct award.

Factors considered by the MCMC included business and technical plans, complaint records, customer satisfaction, and the company's track record in infrastructure projects.

Fahmi reaffirmed that the MCMC will monitor U Mobile's progress on Malaysia's second 5G network to ensure compliance with the Communications and Multimedia Act 1998.

Fahmi also refuted claims that U Mobile’s representation on the board of Digital Nasional Bhd (DNB) contradicts good corporate governance.

Currently, U Mobile and three other companies — CelcomDigi, Maxis, and YTL Power International Bhd (KL:YTLPOWR) — each hold a 16.3% stake in DNB, with the Ministry of Finance holding 34.88%.

"It was a decision by the previous administration to allow mobile network operators to subscribe to shares in DNB, granting them board representation," Fahmi noted.

However, the minister did not elaborate on whether there would be any changes to DNB’s ownership structure, following U Mobile's selection to lead the second 5G network.