Malaysia’s DNB denies that stakeholder talks have broken down

Malaysia’s DNB denies that stakeholder talks have broken down

Malaysia’s wholesale 5G operator Digital Nasional Berhad (DNB) has denied claims in a news report on Friday that negotiations with mobile operators to take equity stakes in DNB have broken down, in part because of an alleged lack of internal transparency.

In December 2023, Telekom Malaysia, Maxis, U Mobile, YTL and CelcomDigi (via Infranation) signed share subscription agreements (SSAs) to collectively take a 70% stake in DNB, with each taking a 14% stake, while the Minister of Finance (MOF) will hold the remaining 30% as well as a “special share”.

At the time, the SSAs were expected to be finalised between February and April 2024. However, a report from Channel News Asia, citing anonymous sources, said that negotiations over the details of the SSAs have stalled over disagreement on “condition precedents” that have to be settled before the contracts can take effect. The report says that points of contention include the appointment of directors who would represent the telcos in DNB, and the completion of three independent confidential audits on DNB.

Complicating matters is the government’s plan to launch a second 5G wholesale network later this year, now that DNB has achieved over 80% coverage of populated areas in Malaysia. Under the terms of the SSAs, each telco could drop out of DNB to take a stake in the new 5G operator.

According to the CNA report, the due diligence reviews that would help telcos decide whether to stay in DNB or move to the second 5G operator were supposed to be completed in January, but are still ongoing. The report quoted anonymous executives from Telekom Malaysia and Maxis who said they are now starting to question whether investing in a second operator is the right way forward, or even economically viable in the immediate term.

The latest figures from Malaysia’s Ministry of Communications show that around 10 million people have subscribed to 5G as of the end of January 2024, which works out to an adoption rate of nearly 30%.

DNB issued a statement on Friday saying the report was “misleading” and that the process of finalising the SSAs was still “ongoing”.

“We strongly deny the claims made otherwise but are unable to comment in specific terms due to confidentiality restrictions,” the DNB statement said.

DNB also denied claims in the CNA report that one reason for the delay was “deep mistrust” between DNB and some telcos over DNB’s lack of transparency in its internal operations, particularly regarding its awarding of contracts to Ericsson and third-party software providers.

The DNB statement denied these allegations too, saying: “DNB has always been open and transparent in its awarding of tenders and contracts – this matter has been addressed in detail various times in Parliament and reported in the media, repeatedly disproving the allegations.”

DNB said the tender process for 5G network equipment, which Ericsson eventually won, “was structured by an independent global professional services firm, and involved some 50 local and international experts from across 10 countries with 5G network rollout experience. The process also has been reviewed by multiple parties, including during reviews of the 5G network policy by the Malaysian Cabinet in 2022 and 2023.”

CNA updated its report on Saturday to include DNB’s response, as well as statements from Telekom Malaysia and Maxis saying that the anonymously quoted executives did not represent their respective company’s official position.

Government news agency Bernama reported Friday evening that Maxis has officially reiterated its support for building a second 5G network in Malaysia.

A Bernama report on Sunday quoted Prime Minister Datuk Seri Anwar Ibrahim as saying the government will hold a meeting to address the claims over DNB’s alleged lack of transparency of its internal operations “next week”.


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