The great consolidation of telecommunication industry had always been the talk of the town, especially when consumer stickiness are scarce, resulting in a wager of pricing between the Mobile Network Operators (MNO) in Malaysia.

If one was familiar with the telecommunication industry, the Average Revenue Per User (ARPU) had been in the same range forever. One company that have a stagnant ARPU might tell you the lack of competitive advantage and pricing power, but when the whole industry suffers the same problem, it means that the industry would need consolidation.

To add salt to the wound, heightened consumption of network would require denser traffic capacity – which would result to an increase for MNO.

And back to Accounting 101, Revenue – Costs of Sales = Gross Profit

While the Revenue factor had been showing signs of distress and stagnant performance, the costs of operation continues to increase on all spectrum, resulting in a higher Costs of Sales, and voila! A lower Gross Profit for the stakeholders.

Will 5G be the saving grace for the telecommunication industry as a whole? The quick answer would be a huge NO.

Let’s be honest, the true application of 5G low latency is towards industrialization, which is critical for all the Penang technology companies, but as for household users like me and you, 5G or not, as long as the Korean drama continue to rolls on 1080p, no one cares.

Our country’s Single Wholesale Network (SWN) 5G model doesn’t seem like it was widely accepted by the MNO, and Digital Nasional Berhad (DNB) also refuted the possibility of converting SWN into multiple 5G access network, which could be a more transparent and costs-effective model as “it could write off DNB’s two years’ worth of work.”

However, UOB Kay Hian Research had recently reported that were still uncertainty lingering around the validity of the SWN model, and there could be a possibility for Dual Wholesale Network (DWN) model, which is still fairer than SWN based on my layman limited knowledge.

Take for example, DNB can still lease or wholesale the 700 MHz 5G spectrum on rural areas to MNO while pondering on the structure of SWN and DWN.

Nevertheless, the competitiveness of the telecommunication industry will still persists, unless drastic mergers continue to occur like Celcom and DiGi, or a single winner for DWN apart from DNB being the holder of the structure with Golden Share rights retained.

My personal take would be stay and observe the telecommunication industry, as there will be no actual needs to jump into the still-maintained-valuation-due-to-index scenario for the MNO in Malaysia.

But of course, I would be wrong.