KUALA LUMPUR (June 9): The government has considered the risk of financial institutions withdrawing their financing facilities to Digital Nasional Bhd (DNB) with the introduction of the dual network model for the fifth-generation (5G) network roll-out, according to Communications and Digital Minister Fahmi Fadzil. 

He said a series of discussions with the Ministry of Finance had already been held and are continuing to ensure that DNB is in a financial position to take on funding to implement the country's 5G network infrastructure.

DNB, wholly-owned by Minister of Finance (Incorporated), was mandated by the government to be the single neutral party to undertake the deployment of 5G infrastructure and network nationwide under the previous single wholesale network model.

“Several DNB funding options have already been looked at, and will be implemented as needed from time to time,” Fahmi said in a parliamentary written reply dated Thursday (June 8). 

He was responding to Tasek Gelugor Member of Parliament Datuk Wan Saiful Wan Jan, who asked the minister to state the implications of the transition to a dual-network duopoly model for long-term contracts between DNB and suppliers, as well as the financial and bank loan status of DNB, and the perception of investors towards policy changes related to DNB.

“The existing contracts of DNB with various parties are still continuing. The government respects the principle of sanctity of contracts,” Fahmi said. 

“However, part of the contract may need to be renegotiated to ensure that the terms and conditions stipulated are in line with the shift in the implementation of the 5G network in Malaysia.”

The total cost of 5G deployment was planned to be financed exclusively by the private sector, with no government funding or development expenditure involved. 

On Nov 12, 2021, DNB announced that it had secured a working capital financing package of up to RM400 million from Deutsche Bank.

The financing package forms part of the estimated RM5 billion total working capital facilities that DNB will require between now and 2024 in order to roll out the planned 5G network.

In October 2021, United Overseas Bank (Malaysia) Bhd (UOB Malaysia) announced that it had provided Ericsson (Malaysia) Sdn Bhd with first-tranche financing in the form of an RM800 million receivables purchase arrangement (RPA).

Network equipment provider Ericsson has a 10-year partnership with DNB to design, build, and maintain the 5G network in Malaysia. 

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.

DNB also intended to establish a RM5 billion sukuk programme in 2022 to replace the working capital facilities, and to facilitate repayment of the RPA.

“This transition to a dual network model is in line with the practice in other countries that offer a variety of networks not only for the people, but also for the industrial sector, which is one of the target groups for the use of 5G technology,” Fahmi said.

“Therefore, this shift will give investors a positive impression, because Malaysia will have more than one 5G network, and they will have more flexibility in choosing 5G service providers in the future.”

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