5G deployment to boost demand for fibre networks

KUALA LUMPUR: The Fifth Generation (5G) network deployment will likely boost demand for fibre networks, benefiting the national connectivity and digital infrastructure provider, Telekom Malaysia Bhd (TM), as well as fixed-line players, research houses said.

Last week, the government unveiled its 5G rollout plan under the Malaysia Digital Economy Blueprint, in conjunction with the launch of the MyDigital agenda.

To spearhead the initiative, the government had established the Government of Malaysia Special Purpose Vehicle (GOMSPV) to oversee the deployment of 5G infrastructure and network nationwide over a period of 10 years, involving an investment of RM15 billion.

“We believe the government’s MyDigital initiative will largely have a neutral impact on mobile operators, while TM should stand to benefit from leasing its fibre to the GOMSPV for the 5G rollout.

“We also see stronger demand for TM’s data centres as the government migrates 80 per cent of public data to hybrid cloud by end-2022,” CGS-CIMB Securities Sdn Bhd (CGS-CIMB) said in a note today.

While it maintained a “neutral” call on the sector, CGS-CIMB cautioned that a key uncertainty would be in terms of cost efficiency in rolling out the 5G network.

“This partly depends on how much the GOMSPV pays to lease the existing infrastructure and from whom.

“Costly rollouts may lead to higher wholesale access fees and reduce the cost-saving benefits for telcos, which, on the other hand, may have to contend with lower retail prices due to lack of network differentiation,” it said.