KUALA LUMPUR: Telekom Malaysia Bhd (TM) stands to benefit from leasing its fibre to the special purpose vehicle (SPV) for the 5G rollout under the government's MyDigital initiative, CGS-CIMB Research in a report said.
The telecommunication conglomerate will also see stronger demand for its data centres as the government migrates 80 per cent of public data to the hybrid cloud by end-2022.
The Malaysian Communications and Multimedia Commission (MCMC), in a recent analyst briefing, said a 100 per cent government-owned SPV would be set up to roll out 5G over a 10-year duration.
The projected RM15 billion investment, which covers purchase of radio equipment and infrastructure leasing, will be front-loaded and funded by the private sector, not by the universal service provision (USP) fund or via new taxes imposed on telcos.
The SPV will lease 5G wholesale capacity (not spectrum) in a transparent, affordable and equal basis to telcos, which in turn will offer 5G services to their end-users.
MCMC will allocate the 700MHz (exact bandwidth to be disclosed later in the National Spectrum Plan), 3.5GHz (bandwidth: 200MHz) and 28GHz (bandwidth: 1.6GHz) spectrum to the SPV.
"We believe this represents the bulk, if not all, the 5G spectrum currently available. MCMC said telcos will not be allowed to re-farm existing spectrum for 5G deployments, to ensure continued focus on expanding their 4G networks.
"Even if new 5G spectrum becomes available in the future, our impression is that it will be given to the SPV as the sole 5G network in the country," CGS-CIMB noted.
CGS-CIMB maintained the sector with a "Neutral" rating.
The firm noted that despite the commendable measures and targets under the MyDigital initiative that would be implemented in three phases until 2030, any delays and cost-inefficient rollout would be the key risks for the policy to take-off successfully.
"In our view, the other key uncertainty relates to the SPV's cost efficiency in rolling out the 5G network, partly depends on how much it pays to lease the existing infrastructure and from whom.
"Costly rollouts may lead to higher wholesale access fees and reduce the cost saving benefits for telcos, which on the other hand, may have to contend with lower retail prices due to lack of network differentiation."
CGS-CIMB said to ensure timely rollout, key performance indicators (KPI) would be jointly agreed between MCMC and the SPV after interaction with the service providers.
Penalties will be meted on the SPV if it is unable to meet the KPIs, though MCMC did not elaborate on the sort of actions that can be taken to discourage this potential outcome, the research firm noted.
"Key beneficiary is TM, which should benefit from leasing its fibre to the SPV and from higher data centre demand as public data migrate to the cloud while key risks are delays and cost-inefficient rollout by the SPV, in our view," the firm said.