KUALA LUMPUR (Oct 28): United Overseas Bank (M) Bhd (UOB Malaysia) has announced that the bank has provided a first tranche financing in the form of an RM800 million receivables purchase arrangement (RPA) to Ericsson (Malaysia) Sdn Bhd (Ericsson Malaysia), which will enable the latter to deliver the initial phases of Digital Nasional Bhd (DNB)’s nationwide 5G network rollout.
Additionally, UOB Malaysia has also been mandated as the lead arranger for an additional RM2.3 billion syndicated RPA for potential financial institutions.
Upon acceptance of the syndicated RPA by the participating financial institutions, a total of RM3.1 billion will be raised in support of the supply, delivery and management of DNB’s entire 5G network, UOB Malaysia said in a statement on Thursday (Oct 28).
“We are optimistic in DNB’s 5G network rollout strategy, as we share a common belief that this milestone project will have a long-term positive economic impact on the country.
“The financial arrangement will enable Ericsson Malaysia to meet its contractual obligation and to support DNB’s mandate to build, to own and to operate the national 5G network,” said UOB Malaysia deputy chief executive officer Ng Wei Wei.
Ng noted this initiative has been identified as a key catalyst for Malaysia’s digital economy aspirations, and that the financing is also testament to UOB’s expertise in structuring complex financing of such size for infrastructure projects.
As part of the agreement to supply, deliver and manage DNB’s 5G network and based on its experience of raising funds for infrastructure projects in other markets, Ericsson Malaysia is helping to arrange the financing of network equipment from foreign and domestic financial institutions.
Head of Ericsson Malaysia, Sri Lanka and Bangladesh, David Hägerbro said the early infusion of funding by UOB Malaysia provides Ericsson with a strong cash flow in the early phase of 5G network deployments in Malaysia.
He added that the launch of 5G in Malaysia will serve as an economic multiplier and accelerate the transformation of the country into a digitally empowered society and knowledge economy.
Meanwhile, DNB chief financial officer Nik Azlan Aziz said DNB is pleased with the confidence and support by UOB Malaysia of DNB’s business model to achieve an accelerated nationwide deployment of the 5G network, consistent with government objectives.
“We look forward to successfully completing the balance syndicated RPA facility of RM2.3 billion, which together with the first tranche of RM800 million will form part of the estimated total working capital facilities of RM5 billion required by DNB until 2024 to roll out the planned 5G network.
“It is intended that these facilities will be replaced by a long-term sukuk programme for which DNB has received strong indications of interest by potential lenders,” he said.
DNB, an entity wholly owned by the Minister of Finance (Incorporated), has been mandated to be the single neutral party to undertake the accelerated deployment of 5G infrastructure and network nationwide. It is licensed under the Communications and Multimedia Act 1998 to provide wholesale 5G coverage and capacity to licensees under the act.
The development of the National 5G Network is part of the MyDigital initiative, designed to develop and to spur the country’s digital economy by 2030 and serves as part of the government’s aspirations to transform Malaysia into a digitally-driven, high-income nation.
The project is also expected to generate new job opportunities and benefit the local economy through the employment of local contractors and Malaysians, the economic multiplier effect and socio-economic contributions.
Overall, the deployment of the 5G network and infrastructure is expected to yield RM100 billion in gross domestic product uplift and create 100,000 new jobs over the next 10 years.