This article first appeared in The Edge Malaysia Weekly on May 19, 2025 - May 25, 2025

U Mobile Sdn Bhd may not know whether its major shareholders will finally get the valuation they want in the planned initial public offering (IPO), but it would seem they are the only party with clarity when it comes to 5G.

Last week, U Mobile announced its exit from Malaysia’s first 5G network owner-operator Digital Nasional Bhd (DNB), but assured its customers that there will be no disruption to their 5G experience as it will continue to ride DNB’s 5G network via a wholesale access agreement while it builds the second 5G network.

U Mobile has even said it aims to achieve 80% coverage of populated areas (CoPA) within the next 12 months. It is not, however, clear if that means U Mobile will no longer be riding DNB’s 5G network after one year. The government too has not said whether U Mobile is required to achieve 80% CoPA within a year as a condition to it receiving half of DNB’s 5G spectrum.

Clarity matters because those left in DNB are three Bursa Malaysia-listed companies — CelcomDigi Bhd (KL:CDB), Maxis Bhd (KL:MAXIS) and YTL Power International Bhd (KL:YTLPOWR) — whose shareholders include wage earners via investments made by the Employees Provident Fund (EPF). The trio now each holds 19.44% of DNB, or 58.3% collectively, with the Ministry of Finance Inc (MoF Inc) holding the remaining 41.7%.

Will the trio eventually be taking up MoF’s stake in DNB? If so, at what price? Or will these three telecommunications companies (telcos) also be allowed to exit with the MoF holding 100% of DNB, but without it no longer being a government-controlled monopoly on 5G?

As it is, not only is there one less party to share the cost of rolling out the 5G network at DNB but the latter also incurs a higher cost of maintaining the 5G network by giving half its spectrum to U Mobile. Without clarity on DNB, investors are left hanging because higher costs inadvertently point to smaller dividend payouts by the remaining three telcos.

These three will need to adjust existing capital expenditure pending clarity, which, in the worst-case scenario, may impact service quality to consumers. The government does not charge a high price for spectrum to protect consumers but the returns should be reflected in consumers getting better 5G network coverage and service at cheaper prices. So far, the government’s decision on Nov 1, 2024 to award the second 5G licence to U Mobile seems to have created more questions than answers. Six and a half months on, surely greater clarity is long overdue?

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