KUALA LUMPUR, Nov 7 (Bernama) -- BMI, a Fitch Solutions company, sees potential for Malaysia’s second 5G network to carve out a role as a niche connectivity provider, particularly supporting Industrial Internet of Things (IIoT) applications.
The research firm said in a statement today that the network could also cater to high-bandwidth digital content and infrastructure providers, such as broadcasters and data centre operators, to meet the increasing demand for data-driven services.
“Such a focus would be more sustainable if lower levels of investment are forthcoming from backers and also provide sufficient differentiation that it could still appeal to Digital Nasional Bhd (DNB) shareholders such as CelcomDigi and Maxis.
“This scenario does seem unlikely, however, and we expect the ultimate outcome will be the creation of two separate 5G networks that may struggle to co-exist in a sustainable manner,” it said.
DNB's 5G network passed 80 per cent population coverage early in 2024, enabling the government to proceed with plans to create a second player.
Though it now supports several million 5G connections, generating significant volumes of monetisable voice and data traffic, the project will likely take several years to deliver meaningful returns on investment.
On Nov 1, the Malaysian Communications and Multimedia Commission (MCMC) announced U Mobile Sdn Bhd has been selected to implement the nation’s second 5G network and said it conducted a detailed technical and commercial evaluation to select the mobile network operator for this project.
BMI said it does seem that U Mobile will be required to disengage from DNB - which is building the first wholesale 5G network.
If this is the case, the other telcos investing in DNB (CelcomDigi, Maxis and YTL Power) would likely need to adjust their financial commitments while also considering whether to withdraw and invest in the new 5G player or remain with DNB and increase their commitments to that project.
“The risk is that all players' 5G investment contributions will need to increase, possibly beyond their existing or planned means and, if spread across two 5G projects, could be applied too thinly to meet stringent coverage and deployment goals,” it said.
To an extent, the research firm said the short-term outlook rests on Telekom Malaysia's response; although it signed contracts to invest in DNB, shareholder approval was delayed and it ultimately was dropped from DNB.
It may now consider joining the U Mobile-led operator, but if its hesitancy over joining DNB was due to concerns over the extent of its investment obligations, it may well balk at joining the newcomer if it is part of a smaller group of backers, it said.
In BMI’s estimation, the MCMC is one of the more reliable regulatory agencies serving the Southeast Asian telecoms market and it believes it will have completed a thorough due diligence process to reach its decision.
“Consequently, we assume that U Mobile has the financial and technical resources needed to sustainably support the new 5G network, provided that additional investors can be brought on board,” it said.
-- BERNAMA
