The incentives would act to mitigate any short-term commercial consequences of providing 5G services to customers, he said in an interview with the Straits Times newspaper in Singapore.
He said the June 30 deadline remained for the companies to decide whether to take up stakes in wholesale network provider Digital Nasional Bhd. “All stakeholders must share a sense of urgency for Malaysia to step up its connectivity game to remain competitive in the region,” he said.
At present Malaysia lags behind Singapore, Thailand, the Philippines, Indonesia, and Vietnam in rolling out 5G technology.
“DNB and the telcos have been asked to meet the June 30 deadline. The majority of the process should be completed by then. If an extension is required, the process may be extended until early July, but no later than that,” he said.
Tengku Zafrul also hinted that the government might offer licences to other companies if the companies, “particularly the larger ones, continue to delay providing 5G services to their customers”.
He said: “Indeed, the interests of Malaysia and its people must take precedence over the telcos’ narrow commercial interests.”
Despite receiving various interest in DNB from both domestic and foreign investors, Tengku Zafrul said Malaysian telcos should be prioritised over any foreign interest. “I do not believe that those other parties will take the place of Malaysian telcos in DNB unless a situation warrants a reconsideration of that stance,” he said.
Tengku Zafrul said 5G will boost the economy by RM650 billion and create 750,000 high-value jobs between now and 2030. “Hence, the success of our 5G deployment is a matter of public interest.”
The first stage of the equity take-up process was successfully completed in early June where all invited parties provided constructive feedback.
“We are now in the second stage, which is the distribution of a term sheet for the telcos’ equity participation. This term sheet summarises the key terms under which DNB will be governed as an entity with both the finance ministry (MoF) and telcos as shareholders. DNB and interested telcos will then work on signing the term sheet as soon as possible,” he said.
Tengku Zafrul said the equity stakes that are not taken up will be redistributed to those who wish to hold equity in DNB.
“So, the telcos may be able to obtain a larger stake than the 7.78% initially offered. However, no investor may own more than 20% of DNB; or 25% in the event of a merger among DNB equity stakeholders.
“MoF will hold 30% of DNB. However, if only a few telcos invest in DNB, the ministry will take up any remaining shares, based on the maximum telco shareholding of 20% to 25%,” he said.
He said the government believes the companies will gain in the long term for not requiring heavy capital expenditure, investment while ensuring higher consumption and thus improved revenue.
Tengku Zafrul said the equity offer in DNB was made to allow local companies to participate in the 5G rollout, not to help with the financing.
“All 5G spectrum will be available only through DNB. DNB is able to obtain financing to fund the network rollout because 5G services will undoubtedly be in demand in the country. I am aware that DNB has discussed financing with various banks,” he said.