KUALA LUMPUR (Jan 10): U Mobile Sdn Bhd, the nation’s newly selected second 5G network access provider, is set to deploy between 5,000 and 7,000 5G sites across Malaysia, according to industry sources cited by RHB Research.
While the official roll-out plan is yet to be unveiled, analysts anticipate it to leverage upgrades of existing 4G sites and the construction of new builds.
Funding for this expansion will likely come from a mix of vendor financing, deferred payment options, and debt funding, the research house added.
Further, “we see U Mobile entering into network collaborations with other mobile network operators, as it is only logical to do so to defray network capital expenditures, which could range from RM3 billion to RM4 billion, by our estimates,” said RHB.
“The sharing of network infrastructure would expedite site deployments, allowing population coverage targets to be met more swiftly,” the house added.
According to RHB, U Mobile had previously signed memoranda of understanding in July 2024 with four network infrastructure providers — Bullish Aim, OCK Group, EdgePoint Towers, and Naza Communications — to facilitate site deployments.
The development coincides with a significant ownership shift at U Mobile, as Singapore Technologies Telemedia (ST Telemedia), linked to Temasek, sold a substantial stake to Mawar Setia Sdn Bhd— a company owned by Malaysian tycoon Tan Sri Vincent Tan Chee Yioun and Johor princess Tunku Tun Aminah Sultan Ibrahim.
U Mobile was selected to implement the second 5G network in November last year by the Malaysian Communications and Multimedia Commission (MCMC).
On Jan 2, the communications minister said it will formally end the single wholesale 5G network, based on the powers under the Communications and Multimedia Act 1998, according to a new ministerial directive sighted by The Edge.
The new directive, known as Directive No 4 of 2024, dated Dec 31, 2024, focuses on implementing a dual network model, which will replace the previous single wholesale model for 5G.
In the ministerial directive, the MCMC has been instructed to proceed with implementing the dual network, subsequently revoking the previous Directive No 3 of 2021, which saw the appointment of Digital Nasional Bhd (DNB) as the sole entity to deploy 5G infrastructure and networks in Malaysia.
"In light of the aforesaid direction, the ministerial directive on the deployment of 5G infrastructure and networks, Directive No 3 of 2021, is hereby revoked," read the directive, signed by Minister Fahmi Fadzil.
TM still RHB's sector favourite
Meanwhile, analysts from RHB see Telekom Malaysia Bhd (KL:TM) as “indispensable” in the connectivity landscape, driven by robust earnings potential from the wholesaling of fibre bandwidth to hyper-scalers and co-location data centre providers.
The research house projects a compound annual growth rate of 11.7% in TM’s earnings for the financial year ending Dec 31, 2024 (FY2024)-FY2026, underpinned by enhanced cost efficiencies that could further accelerate the company’s return on invested capital.
In 2024, Malaysia’s telecommunications sector saw a 5% price return, with TM outflanking its peers by a 25% gain. Without TM's contribution, the sector would have suffered a negative return of -2%, RHB flagged.
Key infrastructure developments include TM's upcoming cable landing station in Morib, which is expected to enhance its capacity to serve the growing connectivity demands of data centres proliferating in the southern Klang Valley.
Additionally, TM’s joint venture with Singtel to establish a 64MW artificial intelligence-enabled data centre, slated for completion by the fourth quarter of 2026, is anticipated to contribute RM80 million-RM85 million to TM’s earnings, said RHB.
Apart from TM, RHB cited notable players including Axiata Group Bhd (KL:AXIATA) for its earnings recovery and balance sheet deleveraging thesis fuelled by macroeconomic tailwinds and continued operational improvements.
The group’s net debt-to-Ebitda ratio has reached its lowest level in two years, with analysts identifying its improved risk-reward profile as a potential rerating catalyst.
On the other hand, while CelcomDigi Bhd (KL:CBD) emerged as one of the worst-performing telcos in the region in 2024, RHB sees it as a “value play” while noting on the company’s subscriber base, which has stabilised, along with prepaid average revenue per user that posted year-on-year growth for two consecutive quarters in 2024.