KUALA LUMPUR (April 2): Malaysia’s telecommunications sector is poised for renewed momentum as the long-awaited rollout of Jalinan Digital Negara Phase 2 (Jendela Phase 2 or JP2) finally gets underway, with operators and infrastructure players expected to benefit from stronger connectivity-related contracts and improved nationwide coverage.
RHB Research maintained its 'neutral' call on the sector, while naming Telekom Malaysia Bhd (KL:TM) as its top pick, citing the group’s exposure to fibre expansion and 5G backhaul opportunities.
The research house said the Malaysian Communications and Multimedia Commission (MCMC) had issued requests for proposals (RFPs) on March 31 for the nationwide broadband and internet connectivity improvement project under JP2, following delays stemming from execution issues in the first phase, particularly in East Malaysia.
The federal government has allocated RM780 million under Budget 2026 for the project, which aims to achieve 100% internet penetration through a mix of traditional tower infrastructure and broadband wireless access (BWA) solutions, including satellite-enabled connectivity.
Fibre premises passed have already exceeded the initial target of nine million, reaching 9.82 million as of the end of January, according to the report.
In the first batch, 1,000 sites out of a planned 2,700 have been assigned, with 69% located in East Malaysia, underscoring the government’s focus on narrowing the digital divide in Sabah and Sarawak. BWA sites account for 64% of the initial allocation, while the remainder comprises traditional sites, including small cells.
RHB said the rollout is expected to benefit mobile network operators through stronger services coverage, particularly in regions where 4G and 5G penetration still trails the national average.
Among listed names, the research house sees TM as a key beneficiary given its wholesale fibre contracts with Digital Nasional Bhd and U Mobile Sdn Bhd for 5G network expansion. U Mobile is targeting 80% population coverage by the second half of 2026, rising to 95% by 2028.
Tier-two players and tower infrastructure contractors are also expected to see stronger order books, including OCK Group Bhd (KL:OSK), Reach Ten Holdings Bhd (KL:REACHTEN) and REDtone Digital Bhd (KL:REDTONE), particularly those with established footprints in East Malaysia.
However, RHB cautioned that execution risks remain, particularly delays in site acquisition and permitting, as many of the new sites are located in remote areas.