PETALING JAYA: Governments should rethink their 5G deployment strategies and consider network liberalization to allow mobile operators to realign their existing spectrum for 5G bandwidth.
In addition, Putrajaya should prioritize improving service quality and expanding coverage in densely populated areas rather than mandating price cuts.
These are two proposals made by Al-Ishsal Ishak, former Chairman of the Malaysian Communications and Multimedia Commission (MCMC), at Macquarie Capital Securities (M) Sdn Bhd’s Corporate Access event.
Ishsal said demand-driven 5G rollouts would lower execution risks, which would be positive for the sector and boost capital expenditure (capex) investment by players.
Contracts signed by Digital National Bhd (DNB) have minimal visibility, but are difficult to revise without negatively impacting the country’s finances.
The government could liberalize 5G by allowing mobile network operators to realign existing spectrum for 5G, allowing for healthy competition (as in Japan), Macquarie Research said. pointed out in the report.
Ishsal believes dynamic spectrum sharing, where spectrum can be used for 4G or 5G, is ideal.
Macquarie believes that if this happens, Celcom Digi will have an additional advantage given its spectral scale.
Nonetheless, Ishsal believes DNB’s spectrum, which is awarded based on equipment allocations at an annual fee, will give the government more flexibility to rethink its 5G deployment strategy.
He pointed out that the CPI data from the Bureau of Statistics showed a decline in prices for telecom-related services unlike other categories.
He believes that instead of forcing price cuts, the government’s role should be fixed on improving the quality of services and expanding coverage in densely populated areas.
Corroborating this, industry feedback suggests that the last few percent of 4G coverage has been difficult. This is facilitated by MCMC’s Universal Service Delivery Fund.
The research firm said Jendela’s goal of increasing the number of fiber-equipped facilities to 9 million by 2025 (7.44 million as of Q3 2022) would require significant capital investment by the sector, according to Ishsal’s report. He agreed with the view and added that there needs to be a balance between pricing and some instruments such as capital spending rollouts. It is the key to increasing penetration.
Against this background, the company reiterated its view that future home broadband campaigns will primarily target specific segments (B40 and M40).
Nonetheless, the worst case scenario allows for an additional RM10 or an 8% reduction in average revenue per user.
As to whether Malaysia should have 100% 5G coverage, Macquarie believes this will be a negative for the sector, especially given the limited business case on the consumer side of 5G.
The priority of research firms in this area remains Telekom Malaysia Bhd.
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If the government decides to liberalize 5G deployment, clarity on 5G by next month would facilitate sector re-grading, reduce implementation risks and reduce costs, it said.
