While 5G is still up in the air, Malaysia’s telcos have lost RM26 billion in market value. What is MCMC doing?

Malaysia’s mass 5G availability is still up in the air as the big four telcos such as Celcom, Digi, Maxis and U Mobile have yet to sign an agreement with Digital Nasional Berhad (DNB). Despite the government’s offer to allow telcos to take up 70% equity in the single wholesale network, it appears that only Telekom Malaysia and YTL Communications have taken up the offer. With the ongoing uncertainties surrounding 5G, The Edge Markets reported that the top public listed telcos have collectively lost RM26 billion in market value year to date.

Maxis, Digi, Axiata and TM lost RM26 billion in value

It highlighted that Digi and Maxis are the worst-performing stocks among the four biggest public listed telcos in Malaysia. However, the two telcos have paid their shareholders nearly all of their profits earned for FY2021 and they are among the handful of counters that pay dividends each quarter. Despite Maxis’ 5.4% net profit drop to RM1.31 billion for FY 2021, it Manages to not only maintain its dividend payout at RM1.33 billion or 17 sen per share, which is similar to FY 2020, and even paid slightly more than 100% of earnings last year. Digi Meanwhile has paid RM1.16 billion which is 99.5% of its RM1.17 billion earnings as dividends in FY2021.

According to The Edge, Maxis has lost over RM9 billion in value as its shares have fallen over 21% YTD based on the price of RM3.81 on 10th May which gave it a market Capitalization of RM28.9 billion. Meanwhile, Digi’s shares have fallen by 18%, which loses close to RM7 billion in value YTD. This was based on a market price of RM3.57 on 10th May which gave it a market capitalization of RM26.9 billion.

Meanwhile, Axiata Group which owns Celcom had lost about RM7.3 billion in value YTD when its shares closed at RM3.45 on 10th May. Telekom Malaysia is the best performing public-listed telco but it still loses RM2.6 billion in value when its shares dropped by 9.45% YTD to RM4.98 on 10th May.

During the same period, it was reported throughout the market has lost RM22 billion from RM1.75 trillion at the start of the year. Meanwhile, companies such as Berhad Malayan Banking, Berhad Public Bank, Berhad Petronas Chemicals Group, and Berhad Hong Long collectively gained RM29.5 billion.

It is also worth highlighting that the performance of telcos is important to several government funds. The top telcos including Celcom, Digi, and Maxis have key government shareholders including the Employees Provident Fund (KWSP), Public Retirement Fund (KWAP) and Permodalan Nasional Berhad (PNB).

What’s going on with 5G in Malaysia?

The Edge’s report Mentions that the persistent uncertainties over 5G and how it would change the industry Dynamics do not help. It got Investors who subscribe to the “sell first, ask questions later” mantra could be the contributor to the Massive decline in stock price that began last year.

Communications and Multimedia Minister Tan Sri Annuar Musa said telcos are still in discussions with DNB on the equity stake and it aims to close the offer on 30th June 2022. However, there’s little visible progress at the moment. The big four telcos have previously said they were open to the equity stake proposal but it has to be done through a Mergers and Acquisition process.

Following the release of DNB’s Reference Access Offer (RAO) on 31st March 2022, the big four telcos said the terms did not address the concerns and issues that were previously raised and discussed with the MCMC and DNB. In a joint statement, the telcos say the RAO in its published form will not enable affordable and quality 5G services for the Rakyat.

DNB Reference Access Offer for 5G

According to the RAO, telcos will have to pay DNB RM30,000 per Gbps per month for the first 1,200Gbps and RM22,000 per Gbps per month for usage above 1,200Gbps. The pricing is tied to a ten-year minimum service term.

As mentioned during an online forum held on the 20th of April, the MCMC aims to Settle the 5G access cost concerns in a couple of weeks. There’s currently an instrument called the Mandatory Standard Access Pricing (MSAP) which is revised in a 3-year cycle but the current MSAP doesn’t include 5G. So far there have not been any updates to the 5G wholesale pricing.

In terms of quality, there’s a tool under the MCMC called the Mandatory Standard of Quality of Service (MSQoS). The latest version was released in 2021 but it does not cover 5G. The current MSQoS document sets a standard for wireless Broadband access service with a network latency of not more than 150ms and a download speed of not less than 2.5Mbps for 90% of the time.

The big four telcos have been eager to provide commercial 5G services to customers and they have announced their commitment to support the government’s decision to proceed with a 5G single wholesale network. In order for the big four to sign up for 5G access, the MCMC as a regulator has to ensure that the RAO by DNB is fair and addresses the cost, transparency, and quality concerns raised by the telcos. Meanwhile, DNB will need the big four telcos on board as it would struggle to deploy 5G Nationwide with just two small telcos as their wholesale customer. Malaysia currently lags behind in the 5G race and this is also reflected in a recent report by Opensignal where neighboring countries such as Indonesia, Thailand, and the Philippines record higher average mobile speeds than Malaysia.

At the moment, YTL Communications’s Yes 5G is still the only telco in Malaysia to offer commercial 5G services. Despite TM signing up with DNB to participate in 5G pilot Trials five months ago, they have yet to offer any 5G-enabled Unifi Mobile plans to customers.


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