5G spectrum U-turn could delay deployment (The Malaysian Reserve)

The 5G deployment in Malaysia could be delayed until next year following the government’s move to rescind the award of 700MHz spectrum frequency bands to several telecommunication companies (telcos), said analysts.

Commercialisation of 5G technology was planned for the third quarter of 2020 (3Q20), the Malaysian Communications and Multimedia Commission (MCMC) said in January this year.

It said the 700MHz and 3.5GHz bands would be assigned to a single entity comprising a consortium formed by multiple licensees, and this would be done through an open tender to lower the capital expenditure (capex) burden on telcos.

However, a letter dated May 15, 2020, surfaced earlier this week, in which the MCMC was instructed to appoint Telekom Malaysia Bhd (TM), DiGi.Com Bhd (Digi), Maxis Bhd, Axiata Group Bhd and Altel Communications Sdn Bhd as the licence holders for the 700MHz band.

The letter was signed by Communications and Multimedia (KKMM) Minister Datuk Saifuddin Abdullah.

On Wednesday, however, the minister said in a statement that he had directed MCMC to “revoke the instructions directed” on the basis of technical and legal issues, “as well as the need of a transparent process”.

Kenanga Investment Bank Bhd analyst Clement Chua said the decision came as a surprise when the MCMC apparently penned the allocation without undergoing a public tender process.

“The above allocations could have otherwise derailed the previous vision to establish a consortium to manage the national 5G deployment.

“Such imbroglio could delay the national 5G deployment even further, possibly until 2021 by our estimates,” he wrote in a note yesterday.

The direct spectrum award had raised questions, being a big step away from the planned open tender process. Altel also came as a surprise choice to some, as U Mobile Sdn Bhd — the country’s fourth-largest telco — was seen as a bigger contender.

Spectrum costs were also not revealed despite it being a material component in the award of new frequencies.

The awardee(s) — whether a consortium or individual telcos — would have to bear the brunt of these costs and incur higher capex spending to build the necessary infrastructure for the new network.

“We would not be surprised if the readiness and commercialisation of the network are delayed towards 2021 (from the initial 3Q20 target),” Chua said.

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The Malaysian Reserve

5 June 2020

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