U Mobile Chairman Tan Sri Vincent Tan has brushed off scepticism about the telco’s ability to carry out the implementation of Malaysia’s second 5G network. According to a report by The Edge, the tycoon who has established Digi and U Mobile, has expressed confidence that U Mobile is able to roll out its own 5G network without the need of government funding or new local partners.
He added that U Mobile plans to roll out its 5G network in the next 15 to 18 months and aims to go public on Bursa Malaysia by the end of this year.
Vincent Tan rules out new local partners for 5G deployment
His response came after analysts suggested that U Mobile will likely struggle to deploy the new 5G network and would have to consider a merger. The report from HLIB said the deployment would be an uphill task considering the size and financials of U Mobile. Among the big three contenders for the second 5G network, U Mobile is the smallest in terms of the number of subscribers and network sites.
Vincent Tan reportedly told the media during a visit to Pulau Ketam that U Mobile was offered more loans than needed and he highlighted his experience in the telecommunications sector.
When asked about potential collaborations, the tycoon ruled out new local partners and they would look for partnerships with Chinese telco suppliers which include Huawei and ZTE.
He said these vendors would supply the 5G equipment and provide financing, while U Mobile would need to fork out their own CAPEX (capital expenditure) along with financing from banks. He added that the details are not yet finalised.
The tycoon was reportedly tight-lipped about the required CAPEX to carry out the 5G deployment as well as the target amount he expects to raise from the upcoming initial public offering (IPO).
In November, Vincent Tan released a statement to defend U Mobile’s win as the second 5G network. Despite being a younger player, he said the orange telco has over 10,000 network sites and achieved over 95% population coverage. He shared that U Mobile recorded a revenue of RM3.5 billion in 2023 and its total assets stood at RM6.2 billion.
Second 5G network can’t rollout until DNB is settled
It has been more than two months since MCMC announced U Mobile as the winner for the second 5G network but there’s little movement on the next steps. The regulator has yet to announce details of the 700MHz and 3.5GHz spectrum assignment as well as the conditions and 5G rollout targets for the second network.
On 31st December 2024, Communications Minister Fahmi Fadzil issued a Ministerial Direction No. 4 of 2024 which revokes Digital Nasional Berhad’s (DNB) status as a Single Wholesale Network. The direction order also instructs the regulator to proceed to undertake the necessary steps to carry out the implementation of the second 5G network by the successful applicant.
Let’s not forget the elephant in the room. As highlighted by Digital Minister Gobind Singh Deo, DNB has already spent RM5 billion to deploy the country’s first 5G network which is mostly funded via private borrowings including loans guaranteed by the government. As part of the transition to a Dual 5G network, the telcos must repay back the government its initial RM950 million funding and takeover bank loans guaranteed by the government before the second 5G network can be deployed.
At the moment, four telco – CelcomDigi, Maxis, U Mobile and YTL, collectively own 65% share in DNB. With U Mobile as the winner, they would need to exit from DNB and question remains on how they would divest their interest. Similarly, the government via the Ministry of Finance currently holds 35% stake in DNB and they would also eventually divest its interest in DNB.
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