Winning the second 5G bid unexpectedly, will U Mobile usher in the opportunity to go public?

The dark horse U Mobile, after winning the second 5G bid, indicated a reduction in foreign shareholding ratios, potentially creating an opportunity for this telecommunications network operator to go public!

To ensure Malaysia has greater control, U Mobile's major shareholder in Singapore, Straits Mobile Investments, needs to sell a 28.3% stake to reduce foreign shareholding to 20%; according to Lianchang International Investment Bank's research, this may be part of U Mobile's initial public offering (IPO) listing.

However, according to the Dahua Research, if Maxis controls DNB by purchasing shares from shareholders, it means that it will take over about 4 billion ringgit in debt.

Malaysia's telecommunications landscape has changed.

With U Mobile unexpectedly winning the bid for the construction of the second 5G network, the competition in the telecommunications industry has become more complicated. Analysts believe that more details may need to be disclosed.

Analysts at Kenanga Investment Bank maintain a neutral stance on this outcome, believing that it is necessary to wait for further details to be released to eliminate the current uncertainty.

"Key areas that need further clarification include specific telecommunications companies to collaborate with U Mobile and the terms of cooperation, the ultimate ownership structure of the National Digital Company (DNB), the coverage scope and timetable goals of the second network, as well as the financial and operational health of the first network."

Analysts also believe that the uncertainty surrounding the first network continues.

"Under the 10-year agreement, DNB will charge Maxis and other operators target access fees of 0.36 billion ringgit and 2.88 billion ringgit respectively."

In addition, the government stated that Entity B, responsible for the second 5G network, has two years to gradually achieve an 80% coverage rate.

If this clause is valid, we believe that the shareholders of entity B will continue to pay 5G access fees to entity A until entity B's network reaches sufficient capacity.

However, once entity B's network is operational, the access agreement may be revised or terminated early, which means entity A may not fully recover its investment, or require financial compensation from entity B.

In view of this, analysts believe that despite U Mobile's selection being an important milestone, many uncertainties still exist, making it difficult to determine whether this development will ultimately be bullish or have a negative impact on other MNOs. Therefore, the 'shareholding' rating remains unchanged.

However, analysts believe that on the positive side, as neither Time dotCom Digital Network nor Maxis were selected, it is expected that there will be reduced capital expenditure and resource allocation for the second network construction.

Telecom experts call for the public disclosure of the selection details.

On the other hand, telecom experts also urge the government to publicly disclose the selection details.

The former CEO of Malaysia's first internet service provider, Jaring, Mohamad Awang Lah, stated that details about U Mobile's appointment are currently unclear, and the government should disclose the terms and key performance indicators of the second operator to enhance transparency.

He expressed his confusion regarding the government's statement that U Mobile is "allowed" to collaborate with other mobile network operators while speaking to 'Free Malaysia Today.'

"Does this mean that U Mobile can operate independently?"

Mohamed Awang Rawa stated that 5G services should be managed by neutral institutions to avoid conflicts of interest, while ensuring equal access for all mobile network operators.

Maxis: Will meet with MCMC

In response to the decision of the Malaysian Communications and Multimedia Commission (MCMC), major mobile network operators (MNOs) have issued consecutive response statements.

Among them, previously seen as a top contender, Maxis stated in a press release that they will liaise with the Malaysian Communications and Multimedia Commission to understand the decision to appoint U Mobile to develop the national second 5G network.

Maxis stated that after discussing with all relevant stakeholders, they "will consider their options."

Maxis stated that as a locally led company by Malaysians, with 77% of the shares held by Malaysians, the company always prioritizes the best interests of the people and the country.

"With Maxis' strong network infrastructure and proprietary technology, our 5G network can cover densely populated areas with the same proportion of the population as the first 5G network in less time and resources."

CDB: considering multiple feasible solutions.

In addition, Tianditong Digital Network also stated that it can almost immediately establish a network that matches the 5G network built by the National Digital Company (DNB).

"We believe that a convincing technical and commercial proposal has been put forward to build a second 5G network, leveraging our financial position and our track record of investing in and deploying large-scale mobile networks to provide affordable, high-quality services for the people."

However, the company also emphasizes in the article that its primary task is still to ensure that customers can access competitive, strong, and efficient 5G networks at affordable prices.

"We will discuss with all stakeholders, considering several feasible solutions in front of us to benefit our customers and shareholders."

At the same time, the company stated that it will continue to focus on merger integration to achieve savings and synergies goals, and continue to provide the best experience for customers.

Ma Telecom: Recognizing the 5G dual-network model.

Meanwhile, Ma Telecom, which had previously been considered to withdraw from the second network competition, expressed agreement with the government's decision on the Dual Network 5G model, as well as possessing an extensive fiber optic coverage network to support the government's 5G implementation.

As a leading fiber optic infrastructure provider in Malaysia, Maxis has extensive nationwide fiber coverage, a powerful digital platform, and mature marketing experience.

"We will utilize our core competencies to support technological advancements in the industry, including the 5G ecosystem."

According to the article, Maxis aims to become a digital powerhouse by 2030, committed to playing a key role in building a digital nation, continuing to support the 5G ecosystem, and driving digital innovation for all Malaysians.