KUALA LUMPUR (June 28): Digital Nasional Bhd announced on Friday that four mobile network operators (MNOs) have completed their respective share subscription agreements (SSAs) and acquired a 16.3% stake each in the 5G special purpose vehicle — higher than the 14% they were initially expected to take up — as Telekom Malaysia Bhd (KL:TM) has yet to complete its SSA.

In a statement, DNB said the four MNOs, namely CelcomDigi Bhd through Infranation Sdn Bhd, Maxis Broadband Sdn Bhd, U Mobile Sdn Bhd and YTL Power International Bhd through YTL Communications Sdn Bhd, now collectively own 65.1% in DNB.

This leaves the government, represented by the Minister of Finance (Inc), with a 34.9% stake and a special share in DNB, which it will hold for a designated period.

"This follows the satisfaction of the conditions precedent under the SSAs on June 20, 2024 for all four MNOs to increase their equity stake in DNB. For TM, the conditions precedent longstop date is Aug 21, 2024. Assuming TM successfully completes the SSA, MOF Inc’s stake will reduce to 30%, with the MNOs collectively holding a 70% stake in DNB," said DNB.

DNB and MOF Inc entered into the SSAs with the five MNOs on Dec 1, 2023 to enable their equity participation in the 5G company.

Under the SSA, each MNO is buying 100,000 shares in DNB at RM1 each, while injecting RM233.23 million of shareholder advances, which carry voting rights.

Every RM1 of the shareholder advance carries a voting right equivalent to one ordinary share in DNB.

TM’s equity participation in DNB will result in a share dilution for the existing shareholders, with MOF Inc’s stake coming down to 30% and the four MNOs’ stake coming down to 14% each.

One month after these MNOs completed their SSAs, they will have to propose which among them would remain in DNB and which will move to the country's planned second 5G network. They are not allowed to be invested in both 5G entities.

There will be an equity restructuring down the road when the second 5G network is ready to provide 5G services.

According to CelcomDigi’s stock exchange disclosure, once the government determines that the second 5G network is “permitted and enabled to provide 5G services”, MOF Inc will have six months to exercise its put option to divest the remaining 30% DNB stake or 500 million shares.

During the restructuring, each MNO will correspondingly exercise its call option to buy 100 million shares at RM1 each from MOF Inc, and assume RM90 million of MOF Inc’s previous shareholder advances to DNB.

For MNOs leaving for the second 5G network, they will also exercise their put option to divest their stake in DNB to the remaining shareholders.

As for the government’s special share, it will be redeemed by DNB 24 months after MOF Inc’s exit.

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