Scepticism remains despite Malaysia’s shift to two operators of 5G wholesale network, says GSMA

The Malaysian government announced last November that it had granted the second nationwide fifth-generation mobile telephony (5G) licence to U Mobile, as the country made the transition to a 5G dual-network wholesale model. 

Malaysia previously operated a single wholesale network with the state-owned entity, Digital Nasional Berhad (DNB), under the Ministry of Finance. 

Speaking to GovInsider, GSMA’s Head of Asia Pacific, Julian Gorman, welcomed the transition, saying that it “was the right one for customer choice, long-term financial sustainability and Malaysia’s competitiveness as a tech and services economy”. 

GSMA is a non-profit trade association that represents the interests of mobile network operators worldwide.   

In a report on Malaysia released last month, GSMA highlighted that Malaysia’s fast-growing digital economy sets up its potential to become an advanced tech hub in Southeast Asia and for that, the country requires a vibrant 5G ecosystem.  

However, the report noted that the government’s 2021 decision to create a single wholesale network led to confusion in the industry, which delayed much-needed investment into Malaysia’s 5G infrastructure. 

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DNB was mandated to operate as a neutral entity tasked with deploying 5G infrastructure and offering wholesale services nationwide. 

Legitimate concerns 

Gorman said that existing operators had legitimate concerns around pricing, control, and competition. 

Additionally, operators were concerned about how to deal with the existing infrastructure and spectrum assets in a single network environment. This led to hesitation about infrastructure investment required to roll out a 5G network. 

Faced with stymied investment in infrastructure building, Malaysia took the decision last year to shift to a dual 5G wholesale network model for deployment because the previous model faced challenges.  

However, this move, though welcome has not brought about greater clarity in the complex 5G scenario in Malaysia. 

Questions had been raised about the criteria used by the Malaysian Communications and Multimedia Commission (MCMC), the advisory body on all matters concerning the national policy objectives for communications and multimedia activities, to select U Mobile.  

MCMC in a statement said the Telco was chosen based on factors like business and technical plans, complaint records, customer satisfaction, and its track record in infrastructure projects. 

U Mobile said it would work with DNB to maintain the quality of 5G service.

There has been controversy surrounding the awarding of the deal to U Mobile, which is the third largest Telco in Malaysia with around 20 per cent market share.  

One of the conditions for U-Mobile being given the right to run the second 5G wholesale infrastructure was its paring down the majority stake owned by Singapore Technologies Telemedia (STT).  

STT announced in December that, under a conditional share purchase deal, Mawar Setia acquired majority stake in U Mobile from Straits Mobile Investments, a unit of ST Telemedia.  

At the time of writing, Straits Mobile holds a 20 per cent stake following completion of the deal.  

Clear regulatory direction required 

GSMA felt that the government needed to set a clear regulatory direction on how the existing operators' spectrum would be handled in the transition to the dual wholesale network.

Gorman noted that according to GSMA,  there was a need for collaborative models between the government and industry to encourage investment, innovation, and efficiency in the 5G market.  

“Establishing such collaborative frameworks is seen as a key challenge in the transition,” he noted.

Guaranteeing market stability and certainty should be the number one priority to unlock substantial investments and drive Malaysia towards a successful digital future, he said.  

Uncertainties remain 

Gorman noted that while Malaysia has achieved good consumer metrics like 80 per cent population network coverage and 40 per cent mobile users on 5G, it is still lagging behind other markets in terms of infrastructure investment and enterprise adoption of 5G. 

While the transition to a dual network provider was a welcomed development, there was still a lot of uncertainty around the terms which U Mobile would operate under and a lack of regulatory clarity for existing operators regarding spectrum allocation.  

“This uncertainty is holding back innovation, investment, and confidence from enterprises and industries that want to leverage 5G for transformation.” 

The industry continues to have doubts about the role and licence for U Mobile and this uncertainty is holding back investment and innovation, Gorman noted. 

Giving an example, he pointed out that under the current spectrum licencing regime in Malaysia, there was no clear path for existing licence holders (mobile operators operating 2G, 3G and 4G networks) to refarm existing spectrum bands for 5G used in the wholesale networks.  

Spectrum refarming refers to repurposing spectrum bands to more efficient technologies and/or new services. This ability is an important part of the transition to 5G, noted Gorman.  

He also pointed out that private 5G networks – used by companies to drive Industry 4.0 applications - provide another example of the lack of clarity regarding how spectrum assignments would work even in a dual network model.  

The report added that without technology neutrality that allows the mobile operators to refarm existing spectrum for 5G use, it would presumably fall to the two national wholesale networks to provide the spectrum for private networks – a situation prone to commercial inefficiency.  

Technology neutrality is also necessary for dynamic spectrum sharing (DSS), which allows operators to use the same spectrum band for different radio access technologies such as 4G and 5G, Gorman added.