MNOs still not pressured to roll out 5G services soon
KUCHING: Mobile network operators (MNOs) are still not pressured to roll out 5G services soon despite the recent announcement of the preference for a Single Wholesale Network (SWN) by Digital Nasional Bhd (DNB) and will still approach this SWN model with vigilance.
According to the research arm of Kenanga Investment Bank Bhd (Kenanga Research), the recent announcement of the preference for a Single Wholesale Network (SWN) by Digital Nasional Bhd (DNB) was a no brainer as it had earlier opined the government will maintain the SWN model.
“We shared the view that the cancellation of the SWN could bring severe risks and repercussions such as induce early-termination payments, adversely impact FDI inflow into Malaysia due to a loss of confidence, delay in 5G network rollout and widen the urbanrural digital divide,” Kenanga Research said.
“The accorded equity participation (of 70 per cent in DNB), looks like prompting the large MNOs (Celcom, Digi, Maxis and Umobile) fully into DNB’s SWN model although the equity divestment is still not clear (indication by end of June 2022).”
The research arm noted that this equity participation looks more a goodwill gesture to the MNOs in exchange for supporting DNB’s SWN, acquiescing to the industry’s request for greater inclusion in Malaysia’s 5G roll-out.
“We opined that the MNOs are still not pressurised to roll out 5G services soon despite this latest development and will still approach this SWN model with vigilance due to a couple of reasons.
“One, lack of pricing and service level agreements. Both the pricing and service level agreements are still being negotiated between the telcos and DNB, and also pending the Malaysian Communications and Multimedia Commission’s (MCMC) approval.”
Without quality of service (QoS) guarantee in a service level agreement, Kenanga Research suspected the MNOs are concerned that potentially poor 5G connections at the start (which would be from SWN’s network) could fall short of telcos’ QoS promises.
“Two, the poor coverage in the initial phase of the network poses a risk to the MNOs’ reputation, especially on quality of service, as they have to be prudent in charging subscribers for services on a network over which they have little control.”
While the said concerns are being discussed between DNB and the MNOs, Kenanga Research is mildly positive that DNB has been increasingly accommodating with the MNOs’ requests i.e. equity participation in DNB.
While there’s hope that the relevant parties (MNOs, DNB and MCMC) could reach a common ground and agreements that are satisfactory for all parties by June 2022, the research arm remained cautious and believe there may be further delays.
On 5G adoption in Malaysia, Kenanga Research opined that it will likely be slow for two reasons.
“One, only approximately 10 per cent of total mobile subs use Unifi mobile and YES, (the first local movers into the 5G spectrum) with little incentive for other users to switch over given users’ expectations of patchy 5G connections.
That said, the research arm foresees minimal churn in the coming months if Unifi mobile and YES remain as the only two operators with 5G services.
“Two, not all 5G devices are compatible. Certain phones, namely the popular Apple iPhones, are not yet compatible with DNB’s 5G network, as there needs to be device certification and software update from the device manufacturers to enable connection to DNB’s 5G network.”