KUALA LUMPUR: 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.
According to BERNAMA News Agency, BMI suggests that focusing on these sectors would be more sustainable if lower levels of investment are forthcoming from backers. This strategy could provide sufficient differentiation to appeal to Digital Nasional Bhd (DNB) shareholders such as CelcomDigi and Maxis. However, BMI expects that the creation of two separate 5G networks may struggle to co-exist sustainably.
DNB’s 5G network passed 80 percent population coverage early in 2024, allowing the government to proceed with plans to introduce a second player.
Although the network currently supports several million 5G connections, generating significant volumes of monetisable voice and data traffic, it is expected to take several years to deliver meaningful returns on investment.
On November 1, the Malaysian Communications and Multimedia Commission (MCMC) announced that U Mobile Sdn Bhd has been selected to implement the nation’s second 5G network. The selection followed a detailed technical and commercial evaluation to choose the mobile network operator for this project.
BMI noted that U Mobile might be required to disengage from DNB, which is constructing the first wholesale 5G network. If so, other telcos investing in DNB, including CelcomDigi, Maxis, and YTL Power, would need to adjust their financial commitments and consider whether to invest in the new 5G player or remain with DNB.
BMI warned that all players’ 5G investment contributions might need to increase, potentially spreading resources too thinly across two 5G projects to meet stringent coverage and
deployment goals.
The short-term outlook partly depends on Telekom Malaysia’s response. Although it signed contracts to invest in DNB, shareholder approval was delayed, and it was ultimately dropped from DNB. Telekom Malaysia may now consider joining the U Mobile-led operator, but if hesitancy over investment obligations persists, it may hesitate to join the newcomer.
BMI believes that the MCMC, regarded as a reliable regulatory agency in the Southeast Asian telecoms market, conducted a thorough due diligence process. Therefore, it assumes that U Mobile possesses the financial and technical resources needed to support the new 5G network sustainably, provided additional investors are secured.