Malaysian Prime Minister Anwar Ibrahim is considering opening the country’s 5G ecosystem to more technology partners, potentially breaking Ericsson’s current supplier monopoly.
The issue will be discussed in an upcoming meeting between the Finance Ministry, which Anwar also heads, and the Digital and Communications Ministry. The decision could significantly impact Malaysia’s most significant technology upgrade, estimated to cost over RM16.5 billion ($3.74 billion) over the next decade.
Sources revealed to CNA that Anwar is open to having other technology players participate in the 5G rollout. This comes after the government received complaints from mobile operators, who claim their opinions were not considered when the previous government pushed for Digital Nasional Bhd (DNB) to lead the 5G implementation in March 2021.
Other sources from the Finance Ministry suggest that there is a strong possibility of opening up the 5G landscape. Malaysia’s 5G upgrade has been fraught with controversy, and Anwar’s government must now weigh its options carefully.
The problem with DNB
Critics of the previous government’s 5G plans argue that it was pushed through without proper consultation with private sector players during the COVID-19 pandemic. DNB’s establishment as Malaysia’s single-wholesale network (SWN) provider, forcing private telcos to lease 5G spectrum from the entity, raised concerns among the public and economists.
Industry analysts opposed to the SWN model advocate awarding spectrum to private telcos, a strategy that they say has historically promoted infrastructure-based competition and innovation in Malaysia. Rais Hussin, a vocal critic of Malaysia’s 5G rollout, argues that the SWN model has generally failed internationally, while over 156 countries and territories are opting for a competitive approach.
Several alternatives are being considered, including allowing a second operator, disbanding DNB and auctioning off the spectrum, or selling DNB to local and foreign investors while the state retains a golden share. The latter option would grant the government veto rights over the company.
DNB has allocated RM4 billion of the total estimated cost of the 5G rollout to Ericsson as the network equipment provider. According to CAN, Singapore-based global investment bank UOB Kay Hian says that introducing a second vendor could lower 5G deployment costs.
DNB officials warn that reversing the SWN model could have substantial financial consequences and further delay Malaysia’s 5G network rollout.
Malaysian telcos must embrace change
Albert Chai, general manager of Red Hat RoSEA, told Disruptive.Asia that Malaysian telcos need to embrace changes in their technologies, practices, and processes to address the challenges of the 5G era.
This involves becoming a more agile and open organization that leverages software technologies to create a modular foundation for innovation. Chai emphasizes the importance of adopting modern IT architectures, operational management approaches, and improving cloud strategies for traditional operators who primarily run on legacy systems.
Global cloud service providers have raised the bar in recent years, demonstrating how cloud-native architectures and open-source development create opportunities to accelerate service delivery, deployment, and iteration. Chai believes that by working with these providers, traditional telco operators will be able to function with greater agility, flexibility, resilience, and security.
However, Chai notes that Malaysian telcos face an ever-changing market landscape, with challenges such as increasing competition, decreasing revenue, traditional infrastructure, global growth due to changing customer demand, and evolving skills.
To thrive in this dynamic and rapidly evolving market space, service providers must reduce costs, create new revenue streams, address infrastructure modernization, meet existing demand, and provide opportunities for upskilling talent, he says.