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Why U Mobile?

KUALA LUMPUR, Nov 5, 2024: More and more questions arise with the Madani Unity Government (UG)’s decision to award the country’s second 5G Network to the smallest telecommunications - U Mobile.

Why U Mobile? The powerful owners?

No News Is Bad News reproduces below a posting by The Coverage on the issue:

News

Who Actually Own U Mobile? How They Beat CelcomDigi & Maxis For The Second 5G Network Tender – Potential Financial Losses For Taxpayers In Billions

5 November, 2024 

 

They cautioned that abandoning the single-network model could lead to substantial write-offs, including RM900 million in unused equipment, while DNB might need an additional RM1.6 billion to meet performance targets due to spectrum changes.

Opposition MP Wan Saiful Wan Jan echoed these concerns, highlighting risks of conflicts of interest and legal issues for mobile network operators under the new structure, potentially burdening taxpayers with further losses. DNB has spent RM5 billion on the existing 5G infra borrowing huge sums from the banking system.

U Mobile was launched in 2007 as Malaysia’s fourth-largest telco (before CelcomDigi merger). At the moment, its 4G network has over 9,000 sites nationwide and is said to have over 9 million subscribers in 2023.

As a comparison, Malaysia’s largest mobile telco, CelcomDigi, currently has nearly 25,000 sites post-merger. The telco is currently undergoing an integration and modernisation exercise aimed at providing a combined 18,000 5G-ready sites by the end of 2025. CelcomDigi currently has 20.2 million subscribers based on its Q2 2024 report.

Meanwhile, Maxis recently revealed it has over 11,000 sites as mentioned in its response to the second 5G network bid. The green telco currently has the second most mobile users in Malaysia with over 12.7 million subscribers according to their Q2 2024 report.

According to a recent report by Macquarie Research, CelcomDigi and Maxis dominate when it comes to revenue share for the Malaysian mobile market. Among the trio, CelcomDigi holds an estimated 50%, followed by Maxis at 37% and U Mobile at 13%.

 

According to the latest SSM data, U Mobile is effectively half-owned by a single Singaporean shareholder. Straits Mobile Investments Pte Ltd which is linked to Singapore’s Temasek Holdings currently holds 48.26%. This is followed by DYMM Yang di-Pertuan Agong Sultan Ibrahim with 22.31%, Magnum Berhad at 7.84%, Singer (Malaysia) Sdn Bhd at 6.10%, U Telemedia Sdn Bhd at 5.59% and Tan Sri Dato Koon Poh Keong at 2.35%.

There are other shareholders including Perbandanan Nasional Berhad, Koperasi Angkatan Tentera Malaysia Berhad and individuals who collectively own less than 10% of the telco.

In a statement issued on Saturday, U Mobile said it will reduce its majority foreign shareholding to 20% to ensure greater Malaysian control and invite participation from local investors.

This isn’t the first time a telco in Malaysia had to reduce its foreign shareholding but the sequence of events is different. Back in 2007, Digi, which was 61% owned by Norway-based Telenor reduced their stake to 49% before it could roll out 3G services. Besides reducing Telenor’s interest, Digi was also required to have at least 30% Bumiputra equity shareholding by the then Ministry of Energy, Communications and Multimedia.

Eventually, Digi obtained the 3G spectrum licence in May 2008 (transferred from Time dotCom). Digi launched 3G services in March 2009, four years after Celcom and Maxis, and almost two years after U Mobile.

Questions were raised about MCMC’s selection for the second 5G network

Since U Mobile is the third-largest mobile telco in terms of sites, subscribers and revenue, many questions were raised about MCMC’s selection. Critics also called upon the regulator to clarify how the second 5G winner was picked. The regulator released the Application Information Package (AIP) on 1st July 2024 to invite telcos to submit their proposal for the second 5G network, however, the details were not made public.

CelcomDigi and Maxis were seen as forerunners in the second 5G network race as both telcos have invested heavily to modernise their existing 4G network to be 5G-ready in the past few years. All they needed was the 700MHz and 3500MHz spectrum to provide 5G coverage using its existing infrastructure.

MCMC also announced that U Mobile can collaborate with other mobile network operators (MNOs) for the implementation of the second 5G network. This line was interesting as the regulator seems to imply that U Mobile would need help from other telcos to compete with DNB.

U Mobile mentioned previously that it is well-positioned to roll out the second 5G network, if needed, solely, to help the government realise its ambition of having two networks.

However, in their latest response, U Mobile said it is excited to work with CelcomDigi and TM to implement the second 5G network. So far, we have not seen any indication that CelcomDigi and TM will be onboard directly with U Mobile for the new network.

In addition, there’s also a huge question mark on TM’s equity deal with DNB. Initially, the government wanted full participation of all telcos in DNB before the transition to a dual 5G network could take place. However, TM has failed to complete the share subscription agreement with DNB as it couldn’t secure its shareholders’ approval on time.

Does this mean MCMC is giving TM a free pass to remain solely as an access seeker without owning equity or will it continue to require TM to take a stake in a 5G network?

Ultimately, the biggest question is how will MCMC ensure a sustainable dual 5G network model to achieve the government’s objective to accelerate 5G coverage and increase adoption?

If U Mobile were to roll out 5G alone on the second network, it would be a David vs Goliath situation as they would need to compete with CelcomDigi, Maxis, YTL and TM who will remain with DNB. CelcomDigi and Maxis combined would have over 29,000 sites which is already more than triple the number of sites U Mobile has at the moment.

Assuming U Mobile has its way with CelcomDigi and TM onboard with the second 5G network, that would create an imbalance as well. This leaves DNB with only Maxis and YTL, which won’t be fair and sustainable for the country’s first 5G network. As a regulator, it is MCMC’s responsibility to ensure fair and healthy competition in the local telecommunications industry.

Following the announcement by the MCMC, the other telcos issued responses to the latest development over the weekend. CelcomDigi insists that it has presented a compelling plan to build a new 5G network using its existing infrastructure and they are weighing their viable options forward. Meanwhile, TM says it will continue to support any 5G initiatives using its vast fibre network infrastructure.

Yesterday evening, Maxis issued a statement saying they are seeking clarity from the MCMC about its rationale for picking U Mobile for the second 5G network. The green telco emphasised they are a homegrown telco with 77% shares held by Malaysians and they are confident that they could roll out 5G to match DNB’s population coverage in far less time and resources including in-building 5G coverage.

Source : Soya Cincau

U Mobile, the new Ali Baba contractor for the second 5G network tender?

The dawn of Malaysia’s 5G future just took a shocking turn. The Malaysian Communications and Multimedia Commission (MCMC) has chosen U Mobile to roll out the country’s second 5G network, a move that was supposed to open up competition and elevate digital infrastructure.

But with so many details cloaked in secrecy, we’re left with one burning question: What is really happening behind closed doors?

The regulator owes it to every Malaysian to walk us through the entire selection process — step by step — and explain why U Mobile, a comparatively smaller player, was deemed the best choice over giants like Maxis and CelcomDigi.

How does U Mobile, which lacks the scale and capacity of its larger competitors, intend to pull off this mammoth task?

U Mobile outsourcing the heavy-lifting of the work?

The MCMC’s decision to hand the tender for Malaysia’s second 5G network to U Mobile has stirred up more than a few questions. Here’s the curious part: U Mobile, while certainly ambitious, is far from the biggest player in the industry.

Unlike giants CelcomDigi and Maxis, which have built extensive proprietary networks covering the nation, U Mobile operates as a Mobile Virtual Network Operator (MVNO), relying on shared infrastructure rather than its own towers.

This fundamental difference in scale raises serious questions: how can U Mobile, without the deep, independent infrastructure of its rivals, be expected to take on the massive responsibility of deploying Malaysia’s second 5G network?

Yet, almost as soon as the announcement was made, MCMC added an odd caveat — U Mobile could collaborate with other telcos to get the job done. Collaborate? A concession for a multi-billion-ringgit national infrastructure project?

It’s as though MCMC already knew U Mobile couldn’t carry this massive undertaking alone. They seem to be setting the stage for U Mobile to hand off critical aspects of the project to Maxis or CelcomDigi, the very telcos with the size, experience, and resources that the project truly demands.

So why bother giving the tender to U Mobile in the first place? What’s MCMC’s play here?

From the start, it feels like MCMC has been bending over backwards to make this arrangement work, with one foot out the door to let U Mobile “share” its role. In most tender processes, subcontracting is left to the main contractor’s discretion. But here, we have MCMC, the regulatory body, practically dictating that U Mobile can pull in its rivals to help.

What’s really going on? Why does it feel like MCMC is tiptoeing around something, pushing U Mobile forward only to let it lean on the very competition that could have taken on the project directly?

The whole setup has an air of something more calculated, as if there’s a script behind the scenes that we’re not seeing.

Doors slammed shut, access denied

Consider this — the Access and Interconnection Plan (AIP) and tender specs for this second network were not disclosed to the public. Not disclosed! Imagine that.

A monumental project shaping our digital landscape, affecting millions of Malaysians, yet not a single taxpayer, telecom expert, or watchdog agency was given the courtesy of a peek into the specifications.

Digital Nasional Berhad (DNB), Malaysia’s initial 5G provider built on taxpayer money, wasn’t just sidelined but outright denied access to these crucial documents. And it didn’t stop there.

The Minister of Digital himself, the top official responsible for ensuring transparency in our telecommunications sector, made a formal request for access to this information. His request? Denied.

And the Ministry of Finance, whose duty is to safeguard public funds? They, too, were left in the dark, never seeing even a fragment of the specs. This isn’t just a little secrecy; it’s an impenetrable wall. And when it comes to a national asset like the 5G spectrum, the stakes are much, much higher.

Forget the dodgy tender process — the real storm is brewing with the second network itself

Let’s pause and consider what this means. The 5G spectrum isn’t just airwaves; it’s a vital, national resource that belongs to every single one of us. DNB, our first 5G provider, was set up as a government entity funded by billions in taxpayer money.

If DNB suffers from this sudden addition of a second network, the government could be left scrambling to cover its costs — and that scramble, as always, falls on the taxpayer.

Then there’s the billions invested by Government-Linked Investment Companies (GLICs) in the telco sector. Institutions like the Employees Provident Fund (EPF), KWAP, and PNB, holding a combined RM30 to RM40 billion in stocks like Axiata, CelcomDigi, and Maxis, are at risk of seeing the value of these investments take a nosedive when markets open on Monday.

These aren’t just corporate losses; they are direct blows to the wealth of everyday Malaysians. With pension funds on the line, the impact of a second 5G network is as much about livelihoods as it is about digital connectivity.

Unless of course, one of them gets to be U Mobile’s “partner”.

DNB’s investment under threat

DNB has already sunk billions into Malaysia’s 5G rollout, relying on a single-network model to provide affordable and widespread access. The entire project was based on preventing duplicated networks and unnecessary costs.

By introducing a competing network, the government risks undermining this original strategy.

The decision to introduce a second 5G network in Malaysia has raised alarms about potential financial losses for taxpayers, with former minister Khairy Jamaluddin and Shahril Hamdan warning it could set state-run Digital Nasional Bhd (DNB) up for failure.

They cautioned that abandoning the single-network model could lead to substantial write-offs, including RM900 million in unused equipment, while DNB might need an additional RM1.6 billion to meet performance targets due to spectrum changes.

Opposition MP Wan Saiful Wan Jan echoed these concerns, highlighting risks of conflicts of interest and legal issues for mobile network operators under the new structure, potentially burdening taxpayers with further losses. DNB has spent RM5 billion on the existing 5G infra borrowing huge sums from the banking system.

It’s already struggling to pay of its debts, the second network is a going to be a nail in the coffin. This isn’t a mere strategic shift; it’s a potential financial and legal catastrophe.

A process shrouded in darkness — where’s the accountability?

Now we turn to the MCMC, the supposed guardian of fairness and transparency. How can they defend this selection process as fair when the specs in the AIP remain hidden from stakeholders?

Without the ability to scrutinise these documents, how can we, the public, trust that these criteria were just? This is more than a bureaucratic oversight; it’s a deliberate decision to keep critical information out of reach.

There’s only one way forward — the specs in the AIP must be released to the public. Only then can we dissect the technical aspects, understand the logic behind the requirements, and see for ourselves if the rules were applied impartially.

The time for questions is now

Regulators, if you insist this decision was just and fair, open up the specs. Show us the AIP and let us evaluate the criteria that shaped this choice. Explain why a comparatively small player like U Mobile was selected over the nation’s biggest telcos. Demonstrate that Malaysia’s second 5G network rollout isn’t just another case of smoke and mirrors, but a genuine attempt to foster a competitive and transparent digital landscape.

Malaysia deserves nothing less.

Source : Politik Ekonomi

Give details about U Mobile deal, say industry experts

The government has been urged to be more open about the appointment of U Mobile to operate Malaysia’s second 5G network, with one telecommunications expert calling for details to be made public.

Internet veteran Mohamed Awang Lah said there was only sketchy information on U Mobile’s selection.

“I hope the details on the conditions and key performance indicators of the second operator will be made public,” said Mohamad, former chief executive of Jaring, Malaysia’s first internet provider.

He said he did not understand the government’s statement that U Mobile “is allowed” to work with other mobile network operators.

“Does that mean U Mobile can operate alone?” said Mohamed, who is known in the industry as Mal.

U Mobile, a private company whose chairman is billionaire tycoon Vincent Tan, was named on Nov 2 as the operator of Malaysia’s second 5G wireless network.

Maxis, which had been considered the front-runner for the second network, said yesterday it would hold talks with the Malaysian Communications and Multimedia Commission (MCMC) on the rationale for its decision.

The company, rated as Malaysia’s second-largest mobile network operator, said it would have taken far less time and resources to roll out the second 5G network with its advanced capabilities.

CelcomDigi, the leading network provider, also said it would have been able to start almost immediately to build a network to match the existing 5G network already created by government-owned Digital Nasional Bhd (DNB).

Mohamad said 5G services should be managed by a neutral party to avoid conflict. and ensure equal access for all mobile companies. “Better yet, all companies should be allowed to operate their own 5G networks,” he said.

Julian Gorman, the Asia-Pacific head of the UK-based GSM association, said clear licensing requirements should be established, to ensure a balanced distribution of 5G services.

“The specific benefits (for service providers) will depend largely on the terms of U Mobile’s licence, which have not yet been fully disclosed,” he said.

“If retail network operators are allocated to a particular wholesale provider, the anticipated benefits of increased competition in the wholesale market may be limited,” he told FMT.

He hoped the second network could intensify competition, enabling service providers to lower prices, making 5G services more affordable and widely accessible.

Gorman said the primary focus should be on stimulating 5G innovation and transformation to support Malaysia’s digital ambitions.

5G refers to the fifth-generation of mobile network technology, and a new global wireless standard that promises the ability to connect everything together with greater speed, providing massive network capacity and improved efficiency.

Malaysia’s first 5G mobile network was rolled out by DNB, which was set up as a single wholesaler providing services to private wireless network companies.

Following intense lobbying by the telcos, the new government led by Pakatan Harapan decided to allow a second network to be set up, and to sell 70% of DNB to the private companies.

Shares were sold to Maxis, CelcomDigi, U Mobile and YTL Communications, with Telekom Malaysia awaiting shareholder approval for the deal.

However, the decision to establish a second network was criticised over potential conflicts of interest, anti-competitive behaviour, wastage of billions of taxpayers’ money, an increased digital divide between urban and rural areas, a decline in 5G service quality, and higher prices for consumers.

Source : FMT