IT was an eventful year in 2022 for Malaysia's telecommunications industry. FARAH ADILLA takes a look back at newsmakers from the year that was.
MALAYSIA's telecommunications players were more resilient despite more cuts in broadband rates as consumers enjoyed the expanded coverage of 4G and crystallisation of the 5G rollout in 2022.
Still, the year was headlined by the 5G rollout conundrum and towards the last three months, controversial awards of major concessions, with the Celcom Axiata Bhd-Digi.Com Bhd merger also dominating.
5G in limbo?
Although the 5G network access agreement between Digital Nasional Bhd (DNB) and the telcos had been settled after much delay, the new government recently announced that it would relook at the 5G project as it was not "formulated transparently".
Datuk Seri Anwar Ibrahim, before being appointed as the 10th prime minister after the 15th General Election (GE15), had previously in 2021 warned that the lack of transparency behind the 5G rollout had the potential to evolve into a scandal as big as 1Malaysia Development Bhd.
Following this, DNB clarified that the approved cost of the 5G network and infrastructure deployment amounting to RM16.5 billion over the next 10 years, would be funded by revenues generated by the sale of 5G capacity mobile network operators (MNOs).
DNB said there was no government funding or guarantees that were anticipated or expected, other than an initial start-up investment of RM500 million.
Five major mobile network operators - Celcom Axiata Bhd, Digi Telecommunications Sdn Bhd, Telekom Malaysia Bhd (TM), U Mobile Sdn Bhd and YTL Communications Sdn Bhd - had commenced retail 5G services to end users, following the execution of their respective access agreements with DNB on Oct 31 last year.
While the development suggested that there would be a delay in the rollout of the project, some analysts said this would not be the case.
They also pointed out that the monopolistic Single Wholesale Network for the 5G rollout was the key culprit behind the sector's de-rating over the last two years.
"Based on the recent announcement by Communications and Digital Minister Fahmi Fadzil recently, he indicated that there would not be any delay to the 5G rollout as Malaysia is catching up with the other economies and the world, coupled with the rumours that the 6G will be rolled out earlier than expected," Kenanga Research analyst Ahmad Ramzani Ramli.
"While there are no further details on the review, I think there is a possibility that the government may want to look at whether it wants to shorten the commitment by the mobile network operators (MNOs) to DNB from the current 10-year agreement."
In the immediate term, he added, earnings for these telcos would be better than what was being forecasted with DNB's rollout.
"Probably, they have to pay to acquire this purchase at a smaller or shorter time frame...this will help telcos to build up their revenue from 5G services," he said.
In the soup
Privasia Technology Bhd and its consortium partner Apex Communications Sdn Bhd, as well as TM and Hydroshoppe Sdn Bhd landed themselves in hot soup over what many saw as "rush jobs".
A RM1.2 billion contract awarded to Privasia-Apex consortium one day before Parliament was dissolved was a subject of another big review by the new government.
On Oct 11 last year, Privasia announced that a joint venture (JV) between its wholly-owned Privasat Sdn Bhd and Apex had accepted the contracts awarded by the then Communications and Multimedia Ministry.
The contracts entailed the installation and maintenance of fibre optics in both northern and southern regions.
The contract for the southern region covering Negri Sembilan, Melaka and Johor was worth RM627.2 million, while the northern region covering Kedah and Perak was valued at RM617.5 million.
Loss-making Privasia, which is listed on Bursa Malaysia's ACE Market, saw its current order book skyrocketed from just over RM50 million after securing the RM1.2 billion contracts.
"I have yet to be briefed on this matter (Privasia) in detail but it is something which perhaps we will look into, but at the same time as a government, we respect contractual obligations," minister Fahmi said after a visit to Media Prima Bhd in mid-December.
"The primary question is the issue of governance and transparency and whether things were done above board," he added.
TM, meanwhile, reportedly had quietly sold its concession to manage Menara Kuala Lumpur to an unknown company.
TM distances itself from Menara KL brouhaha
TM, meanwhile, reportedly had quietly sold its concession to manage Menara Kuala Lumpur to an unknown company.
However, TM clarified that it did not own Menara KL and it was only the company that manages the building. The 420.7-metre tall structure, which is currently the seventh tallest tower in the world, actually belongs to the government.
According to the Companies Commission of Malaysia's (SSM) records, Menara Kuala Lumpur Sdn Bhd's (MKL) shareholding was changed on Oct 31 last year when TM transferred 10 million units of MKL shares to Hydroshoppe.
SSM's records reportedly showed that Hydroshoppe was a company incorporated in 2008 with a RM1 million capital, and with general trading as its nature of business.
TM had then clarified that it had in October 2021 decided not to renew its Menara Kuala Lumpur concession and had informed the government accordingly.
TM also clarified that subsequently in 2022, the selection process of the new concessionaire was taken up by the government upon which the group was informed on the appointed company to take over the shares of MKL and the concession.
TM said the decision not to renew the concession was made after due consideration of the change in the business nature of Menara KL, from telecommunications services to tourism and hospitality.
Former communications and multimedia minister Tan Sri Annuar Musa had denied any involvement in the transfer of the concession. He told New Straits Times recently that TM was a listed company and was never under the ministry.
Celcom and Digi become One
On Nov 30, Axiata Group Bhd's subsidiary Celcom and Telenor Asia Pte Ltd's subsidiary Digi announced that they had completed their merger where both the holding companies own equal ownership of Celcom Digi Bhd at 33.1 per cent each.
Celcom Digi created a US$10 billion (RM44.4 billion) converged operator in Malaysia.
Telenor Asia and Axiata decided to merge their Malaysian operations back in April 2021 but it was only on June 29 last year that the Malaysian Communications and Multimedia Commission allowed these two parties to proceed.
Axiata and Telenor said on a proforma basis for the financial year 2021, Celcom Digi would serve an estimated 20 million customers, with revenues of RM13 billion and earnings before interest, taxes, depreciation and amortisation (Ebitda) of around RM5.8 billion.
Axiata group chairman Tan Sri Shahril Ridza Ridzuan said the merger would invest in expanding its network coverage and supporting Malaysia's digital ecosystem.
"I am confident that Celcom Digi, backed by the global experiences, excellent governance standards and financial strengths of Axiata and Telenor Asia as shareholders, is well placed to serve Malaysian consumers and enterprises seeking to step up on digital competitiveness in the current era," he said.
Celcom-Digi planned to invest RM250 million over five years to catalyse the IR4.0 and strengthen the local ecosystem.
It would also focus on developing rural areas by bridging the digital divide to spur better socioeconomic participation.
Wider coverage
High-speed broadband controversy aside, DNB announced last month that the 5G network coverage would have exceeded 40 per cent in populated areas nationwide by December last year and was on track to achieve 70 pe rcent population coverage by end-2023 and 80 per cent by 2024 or earlier.
It would include almost all of Kuala Lumpur, Putrajaya, Selangor, Penang, Johor and Negri Sembilan, as well as some parts of Melaka, Perak, Kelantan, Sabah and Sarawak.
DNB expects 5G networks to reach 14 million people located in the areas where the network has been established and in excess of 30 million over the next two years.
Thus far, 54 per cent of 3,500 sites for 2022 had been completed with coverage areas that include the Klang Valley, Penang, Johor and Perak. Johor led the way with a 91 per cent completion followed by Kuala Lumpur (76 per cent) and Selangor (57 per cent).
Analysts said the demand for local mobile and broadband would be supported with the wider coverage at the end of Phase 1 of the Jendela initiative.
Players like Digi look set to benefit from the wider coverage, reaching the remote corners of Malaysia and the return of migrant workers.
Meanwhile, telco infrastructure providers OCK and edotco of Axiata Group Bhd would ride on the massive spending on telco infrastructure both domestically and in the region.
Under Jendela, targets were set such as nine million premises with access to broadband, 100 per cent internet coverage in populated areas and 100Mbps mobile broadband speed by 2025. Thus far, good progress has been made and certain interim targets have even been exceeded.
As of the first nine months fo 2022, Jendela's Phase 1 target of 7.5 million premises (1H2022: 7.2 million) had access to fibre broadband and 95.8 per cent (versus 2022 target of 96.9 per cent) of populated areas had access to 4G coverage.
Average mobile broadband speed had also increased to 52.48 Mbps (megabits per second), surpassing the original Phase 1 target of 35 Mbps.
In enhancing overall digital infrastructure, 2.48m premises enjoyed fibre connectivity (1H2022: 2.24 million), 36,000 stations upgraded to 4G technology (1H2022: 34,000), 1,420 4G towers built (1H2022: 1,330) and 839 locations had satellite connectivity as of the third quarter of 2022.
Broadband rates joy and concerns
There were excitement from consumers and concerns from telco players over more cuts in broadband rates with the Pakatan Harapan coalition leading a "unity" government after GE15.
In 2018 after GE14, the Malaysian Communications and Media Communication (MCMC), under the recommendation of then Minister of Communications and Multimedia Gobind Singh Deo, rolled out the Mandatory Standard on Access Pricing (MSAP).
This effected a 43 per cent reduction in the price of the limited fixed broadband package to RM79 per cent month from RM130 per month previously, while tripling the speed to 30 Mbps from 10 Mbps.
Similarly, the unlimited package saw a 61 per cent reduction to RM129, while doubling the speed to 100Mbps.
TM, the leading provider of broadband services in Malaysia, had lost as much as two thirds of its market value in five months following the move.
The group suffered a six per cent year-on-year decline in Unifi average revenue per user in 2018 but this was mitigated by a 19 per cent increase in subscribers propelled by the improved affordability of the service.
Broadband package prices in Malaysia now average at US$33 per month from US$45 in 2017, or US$0.14 per Mbps which fall within the range of US$31 to US$258 per month in neighbouring countries.