What's Happening?
Three Malaysian telecom operators, CelcomDigi, Maxis, and YTL Power International, are set to assume all liabilities of Digital Nasional Berhad (DNB) as the government plans to sell its shares in the country's first nationwide wholesale 5G network. Each operator holds a 19.44% stake in DNB following U Mobile's withdrawal to focus on building Malaysia's second nationwide 5G network. The Ministry of Finance, DNB's largest shareholder, holds a 41.7% stake. Malaysian Digital Minister Gobind Singh Deo stated that the telco companies are committed to financing and operating DNB without additional financial implications for the government. The government initially provided DNB with a capital injection of 500 million Malaysian ringgit in equity in 2021, followed by a shareholder loan in 2023. DNB also obtained a receivables purchase agreement and a government-guaranteed loan, both fully utilized.
Why It's Important?
The transition of DNB's liabilities to private telecom operators marks a significant shift in Malaysia's telecommunications landscape, as the government moves towards a dual 5G network model. This change could impact DNB's financial stability and operational dynamics, as the remaining shareholders will need to manage the company's debt and ensure its sustainability. The move also highlights the government's strategy to privatize its stake in DNB, potentially influencing future investments and partnerships in the 5G sector. The operators' commitment to supporting DNB's operations underscores the importance of maintaining service quality and optimizing operations amid competitive pressures from emerging 5G providers.
What's Next?
As the government relinquishes its ownership stake in DNB, the company is expected to become a fully private entity. The transition to a dual 5G network model will require careful management of DNB's financial obligations and strategic planning to ensure continued operations. The operators may need to inject additional capital to support the 5G rollout and maintain service quality. A steering committee has been established to oversee DNB's funds and report to shareholders regularly.
