Malaysia’s 5G deployment moved to 2023?

KUALA LUMPUR: The deployment of 5G technology in Malaysia has been moved to 2023 as the government focuses on expanding existing 4G coverage and increasing mobile broadband speed under the Jendela Plan.

Hence, Telekom Malaysia Bhd (TM) had shelved its aspiration to be the nation’s 5G infrastructure company, Affin Hwang Capital analyst Isaac Chow said.

He disclosed this following a virtual meeting with TM chief financial officer Razidan Ghazali and vice president of corporate finance and investor relations Delano Abdul Kadir.

“Overall, we expect the group to reassess its 5G strategy closer towards 2022. The group’s extensive fibre network remains an essential asset in Malaysia’s 5G deployment, and we expect TM to play an important role (direct or indirectly) in the country’s 5G deployment come 2023,” Chow said in a report today.

Another telco analyst told the New Straits Times as there was no official clarification on the issue at the moment, there was no clear winner yet from the expected deployment of 5G.

The analyst said the ideal way to move forward with 5G deployment was for telcos to work under a consortium to help them manage cost via shared infrastructure.

“As it is going to involve huge capex (capital expenditure) for 5G deployment, it just make sense for them to work as a consortium,” the analyst said.

On June 3, a few months after the change in government, the Malaysian Communications and Multimedia Commission (MCMC) said it had been asked to cancel the 5G spectrum bands awarded to five telco players without open tender.

Communications and Multimedia Minister Datuk Seri Saifuddin Abdullah had said “18 instruments including the use of the spectrum on the bandwidths of 700MHz, 900MHz and 2600MHz” had been presented to him.

“Based on technical and legal issues, as well as the need to be more transparent, I have ordered the MCMC chairman to cancel the ministerial order and review the instruments as soon as possible,” Saifuddin said in a statement then.

After a public outcry over the issue, Saifuddin reversed the decision within 24 hours.

On September 4, Prime Minister Tan Sri Muhyiddin Yassin said despite the 5G deployment plan, the Jendela Plan was prioritising upgrading broadband and 4G and phasing out 3G by end-2021

Meanwhile, Chow said TM shared that its capex and fibre rollout targets were not affected by the Jendela Plan.

The group has already drawn out a plan to increase its home passes from 4.4 million in 2019 to six million by end-2022.

He said this should assist the government in achieving its target of 7.5 million home passes by end-2022 from 4.95 million currently.

Chow said the revenue from TM’s Unifi segment held up well in the first half of 2020, in spite of the difficult market conditions due to Covid-19 and the Movement Control Order.

“Moving into the second half of 2020, we expect the positive momentum from the Unifi segment to sustain and TM wholesale may have a bumper fourth quarter on IRU (indefeasible rights of use) sales. Nonetheless, the revenue from TM One may stay weak due to cautious business sentiment.”

Overall, he expects TM’s second half of 2020 earnings before interest, taxes, depreciation, and amortisation (Ebitda) to mirror that of the first half but its earnings may come in weaker due to normalisation in depreciation and tax expenses,” he said.

Chow has maintained Afiin Hwang Capital’s “buy” call on TM with an unchanged target price of RM5.

Source: NST