KUALA LUMPUR: Market watchers are bullish about the telecommunications (telco) industry in light of the most recent advancements in the nation's 5G saga.

Four major mobile network operators-CelcomDigi Bhd through Infranation Sdn Bhd, Maxis Broadband Sdn Bhd, U Mobile Sdn Bhd, and YTL Communications Sdn Bhd through YTL Power International Bhd-are set to acquire equity stakes in Digital Nasional Berhad (DNB).

U Mobile said it is ready to complete the share subscription agreements (SSA) process with DNB to enable the transition to the nation's dual 5G network model.

The company said it is well-positioned to roll out the second 5G network if need be, solely to help the government realise its ambition of having two 5G networks to drive competition.

This will also ensure the sustainability of the telecommunications ecosystem in Malaysia, it said in a statement.

CelcomDigi chief executive officer Datuk Idham Nawawi has said the company is supportive of the implementation of the 5G dual network model.

"We hope to have an outcome that equitably balances the economic and market impact, that benefits the government and industry and more importantly Malaysian customers and businesses," he said in a recent statement.

According to Toh Woo Kim, head of research at Mercury Securities, the completion of the SSA with these four Mobile Network Operators (MNOs) represents a major advancement and is necessary for moving towards a dual network model for 5G rollout in Malaysia.

The precise process for building the second 5G network, however, has not yet been determined or made public by the government.

According to Toh, this can provide problems for the industry, especially for the MNOs, and it might even have an impact on investor confidence.

Kenanga Research believes the announcement of the 5G dual network policy directive, which may come by September, would clear up uncertainty in the sector that has dragged on investors sentiment.

"By then, investors will know the final equity stake for each telco in entity A, which will assume control of the existing 5G network owned by DNB, or entity B that will develop the new 5G network from the ground up," it said in a note.

Kenanga Research expects sustained deployment of the first 5G network in Malaysia via the roll-out of an additional 2,500 (estimate) sites in 2024 from circa 5,000 sites last year, following the completion of the SAA.

The research house said moving forward, as the upcoming second 5G network in Malaysia takes shape, tower operators may participate in its development via co-location at existing tower sites, and construction of new build-to-suit (BTS) towers, rooftop structures, in-building solutions etc.

"We believe investors are more upbeat as monetization opportunities emerge from providing 5G solutions to enterprise clients. 

"Infrastructure players are expected to receive tower contracts from the roll-out of 5G in regional markets like Laos, Vietnam, Indonesia and Malaysia," it said.

While only four telcos are expected to complete the equity deal process this month, Telekom Malaysia (TM) Bhd is still seeking its shareholders' approval in accordance with its governance requirements.

Meanwhile, AmInvestment Bank said that once the share sale agreements are completed by the end of June, the selection process to build and operate Malaysia's second 5G network will commence.

The firm said at this juncture, it remains to be seen whether TM will miss the chance to operate the second 5G network.

TM had previously indicated intentions to become an access seeker instead of owner of the second 5G network.

"We believe TM wholesale would benefit from additional fibre leasing backhaul business from the second network," it said.

https://www.nst.com.my/business/corporate/2024/06/1066782/outlook-bullish-progress-dnb-deal