Possibly partnering with Maxis to introduce 5G, U Mobile disrupts the telecommunications industry landscape.

According to Bloomberg Intelligence, after U Mobile obtains the development rights for Malaysia's second 5G network, it will change the landscape of the telecommunications sector in our country.

In the view of Bloomberg Intelligence analysts, U Mobile may cooperate with Maxis to operate the second 5G network, thereby enhancing its competitiveness in the Malaysian telecommunications market, and then challenging the leading positions of the country's two largest telcos - Celcom Axiata and Digi Telecommunications.

"If U Mobile seeks a partner to jointly develop the second 5G network, having fiber infrastructure and financial resources, Maxis would be a good choice."

The analyst pointed out that U Mobile's net debt is equivalent to 4 times earnings before interest, taxes, depreciation, and amortization (EBITDA), while Maxis' debt ratio stands at a reasonable 0.65 times, capable of sharing the high costs of developing the second 5G network with the former.

According to our analysis, U Mobile may need to invest about 3 billion Ringgit in the next two years to launch the second 5G network.

Looking from Maxis' perspective, analysts suggest that partnering with U Mobile is expected to increase Maxis' contribution to mobile telecommunications revenue from the current nearly 10% to over 10%, supported by its fixed-line user base, benefiting from the broader mobile network coverage and quality brought by the collaboration.

"A potential collaboration with U Mobile would transform Maxis into a comprehensive integrated telecommunications operator, strengthening its competitiveness in mobile telecommunications. To date, Maxis only holds a 2% market share in the Malaysian mobile telecommunications market."

He also mentioned that as a state-owned enterprise, Ma Telecommunication may need to address some regulatory issues to proceed with cooperation, while U Mobile has pledged to increase local shareholding and is moving in the same direction.

U Mobile's major shareholder - ST Telemedia from Singapore, reached an agreement with Mawar Setia Private Limited (MSSB) last week to sell 29% of its shares to the latter for an undisclosed amount, reducing its stake to 20%.

MSSB was jointly founded by Successful Group founder Tan Sri Tan Chai Eian and Tengku Amina, the Princess of Johor, holding 70% and 30% of the shares respectively.

Furthermore, the analyst pointed out that U Mobile is currently engaging in an aggressive price war to attract customers, posing significant challenges to its major competitors Maxis and Celcom Axiata.

The pricing of U Mobile's 5G service packages has been reduced by 25% to 35% compared to competitors, enabling the company to continuously attract new users starting from the second quarter of 2023.

In early November this year, the government announced that U Mobile would become Malaysia's second 5G network operator, surprising market observers. Previously, the financially strong Maxis was predicted to be the winner of the second 5G network.