Kuala Lumpur — The shift is hard to miss: Malaysia has handed the build-out of its entire fifth-generation mobile network to a single state vehicle working with a single vendor. Digital Nasional Bhd, the government-owned special purpose company known as DNB, has appointed Ericsson to design, build and maintain the national 5G network at a total estimated cost of RM11 billion. The capital-region trio of Kuala Lumpur, Putrajaya and Cyberjaya gets service by December 2021, with the wider goal of 80% nationwide population coverage by 2024 — one of the more aggressive single-track rollouts anywhere in the region.
Anatomy of the deal, by the numbers: Ericsson’s charges for network equipment, deployment, maintenance and management come to RM4 billion, which DNB calls the lowest on offer. Roughly RM7 billion more covers network infrastructure from other parties — chiefly tower rental and fibre leasing across a 10-year period. By DNB’s accounting the winning package was “around RM700 million lower than the total cost of ownership of the next closest bid”. Financing comes from foreign and domestic institutions Ericsson undertook to arrange, with DNB securitising future wholesale cashflows via sukuk. “Accordingly, there will be no government funding required for the 5G network rollout.”
How The Winner Was Picked
DNB has leaned hard on process. The tender, it says, was structured by Ernst and Young Consulting to global standards, run through four panels drawing on some 50 local and international experts from 10 countries with live 5G experience. The funnel started at 14 network equipment providers, cut to eight shortlisted bidders, and ended with just four actual bids — with Ericsson ranked top across the technical, commercial and socioeconomic components. “The strictest standards of governance were adopted throughout the tender process as advised and facilitated by EY Consulting.”
The trend underneath, though, is that almost nobody else does it this way. Critics, including veteran Malaysian commentators, point out that two or more competing 5G players is the global norm — Singapore paired Ericsson with a local operator, and the Philippines, Indonesia and Thailand all spread the work. The alternative on the table: a second network running alongside DNB’s, plus a spectrum auction of the kind used in South Korea, Germany, Thailand and Bangladesh, which would also raise money for a pandemic-hit treasury. Even the GSMA, the global body uniting more than 750 operators and nearly 400 companies, has raised questions about the deal and DNB’s governance.
Then there is the arithmetic a local newspaper flagged: a RM700 million saving spread over a 10-year horizon works out to about RM 70mil a year — real money, but perhaps not decisive money for what The Star called the connectivity base meant to propel the nation’s economic growth.
Watch This Space
There are sweeteners for the domestic audience. DNB says more than 60% of network infrastructure spending will flow directly to Bumiputera interests in telecommunications and Bumiputera contractors, and Ericsson has committed an estimated RM4 billion toward Malaysia’s knowledge economy — jobs, 5G skills and socioeconomic gains — over the life of the contract.
What’s changing is the stakes: a single-network model puts a nation’s digital backbone on one organizational chart. The December launch window in the capital region will be the first proof point, and the industry’s skeptics — GSMA included — are watching whether one vendor, one network and one promise of coverage hold all the way to 2024.
Sources
- More players for 5G network rollout (Opinion) | 5GTalkAsia
- Digital Nasional Berhad Makes Considerable Progress On Malaysia’s 5G Network Rollout | Digital Nasional Berhad
