U Mobile and the 2nd 5G Network award..
QUESTIONS ARISE
1 - Was there an OPEN TENDER or did the Malaysian Government do 'wrong' again by picking U Mobile on its own...
2 - When the the second 5G Network was given to U Mobile > it was owned by foreigners(about 48%) - Why was there not a consideration for Malaysian owned companies, say at least 80-90%?Should we not be looking at the Company, as it is, and not based on what it may or may not do after gets the 5G award? When it comes to 'tender/awards', will the government also consider the future plans of companies, including change of ownership in the future.
Singapore’s Temasek Holdings’ unit owns 48% of U Mobile and is owed a significant sum as it has been one of the main funders for the telco. If the shareholder advances and preference shares are converted to equity, that stake in U Mobile could rise to around 80%, sources say.
On Wednesday, the Singaporean unit said it was selling down its majority stake in U Mobile to Mawar Setia Sdn Bhd, a company owned by Tan Sri Vincent Tan and Johor princess Tunku Tun Aminah Sultan Ibrahim. The statement made no mention of the value of the stake to be sold, but it did add that the Singaporean entity will hold a minority stake of 20% in U Mobile following the sale.
3 - How long is this Award - how many years or indefinitely?
4 - Problem again emerges - the fact that it had shareholders who were members of Malaysian Royalty? Question is whether preferential treatment was accorded if the bidding company is part owned by Royalty, politicians or government parties, GLCs (government owned or linked companies)?
Mawar Setia is 70 percent owned by tycoon Vincent Tan and 30 percent owned by Tunku Aminah Sultan Ibrahim - the Johor ruler’s daughter. Tunku Aminah’s effective stake in U Mobile will be 8.5 percent. Her father, Sultan Ibrahim Sultan Iskandar - also the current Yang di-Pertuan Agong - owns 22.3 percent of U Mobile.
See also:-Should the King and Royalty abstain from BUSINESS whilst they serve as King or State Rulers?
5 - ARE Malaysians now BARRED from talking about U Mobile since the Royalty is involved? In my opinion, a sitting royalty should NOT be involved in business - it is a 'problem' as many Malaysians still are 'neo-feudal' - as such a different treatment may be accorded when the Royalty, government politician/Ministers, ...are involved - and this may be an impediment to proper government administration and even law enforcement.. Should sitting politicians like Prime Minister, Ministers, Party leaders of 'in-government' parties be required to get out of companies/businesses as soon as they assume power? [Wrong for anyone who is privy to government 'secrets' be it plans to award tenders/contracts, or plans to develop certain locations to USE such information to enrich themselves, their family or friends...)
There are SERIOUS ISSUES - and one wonders whether there is a LACK of expressed opinions because the King and his daughter are involved?
OPEN TENDER? When awarding certain matters - should a requirement of 80% Malaysian ownership be a consideration?
Parliament should investigate....
Malaysia’s 5G turmoil continues
- Malaysia’s telecom sector is once again in turmoil over the country’s 5G networks plan
- The government recently selected U Mobile to build the country’s second national 5G network
- The decision has come in for widespread criticism, not least because of U Mobile’s shareholder structure
- The mobile operator has tried to appease the critics, but to little avail
Malaysia and 5G are, it seems, not the most settled of bedfellows, as the fallout from the recent award of a contract to build and run the country’s second 5G network has shown.
The country already has one 5G network, the Digital Nasional Berhad (DNB) shared network, in which most of the country’s main mobile operators – namely CelcomDigi, Maxis, U Mobile and YTL Communications – eventually acquired stakes earlier this year, with Telekom Malaysia (TM) the only telco that didn’t complete a transaction.
The agreements to take a stake in the DNB came just as the operators were lining up to bid to be the government’s preferred partner for the construction of a second, competitive 5G network – see Malaysia’s telcos jostle over second 5G network.
The expectation was that, in a country with about 50 million mobile connections, either market leader CelcomDigi (with more than 20 million mobile customers) or Maxis (with almost 13 million mobile customers) would prevail, ahead of U Mobile (with just over 9 million mobile customers).
Then in early November, U Mobile was awarded the deal by Malaysia’s government to build out the second 5G network, an award that comes with spectrum licences but no government funding.
The decision is controversial: It came as a surprise to many industry watchers and attracted criticism from multiple quarters, not least because U Mobile is not one of the market leaders and is a privately held company whose main shareholder (with a 48% stake) is Straits Mobile Investment Pte, a wholly owned unit of Singapore-based infrastructure investor ST Telemedia.
At the time of the contract award, U Mobile noted that, “in alignment with our commitment to the national agenda,” it planned to “reduce its foreign majority shareholding to 20%, ensuring greater Malaysian control and inviting participation from local investors.”
Clearly, that pledge wasn’t enough and, on 10 November, U Mobile issued a follow-up statement to note that Straits Mobile Investment had agreed to reduce its stake to 20%. “While foreign ownership is common in the telco sector, U Mobile’s strategy prioritises Malaysian industry development and strengthening of local ownership. This increased local partnership supports U Mobile’s dedication to national interests,” it stated.
It also felt compelled to stress its worthiness. “U Mobile has invested over 5bn Malaysian ringgit [US$1.12bn] in its network infrastructure, expanding its national population coverage from 67.5% in 2018 to 95% by early 2024, and has installed over 10,000 sites to date. This places it on par and competitively with its peers. U Mobile prides itself for constantly investing in its network to make it AI-powered and more autonomous. U Mobile, with its shareholders and vendor partners, have successfully completed its national 3G and 4G network rollouts and are committed to invest in the 5G deployment, using private sector funding only,” it added.
The country’s telecom regulator, the Malaysian Communications and Multimedia Commission (MCMC), was clearly also feeling the heat, as it issued a statement to stress that a “rigorous selection process” was followed in awarding the contract to U Mobile.
And the controversy doesn’t appear to be subsiding.
The government continues to face criticism for the decision, with suggestions that U Mobile landed the deal thanks to its links to Malaysia’s king, Sultan Ibrahim Iskandar, who holds about 22%, and the business power of U Mobile’s founder and chairman, pan-industry tycoon Vincent Tan: That kind of suggestion is embarrassing for Malaysia’s Prime Minister, Anwar Ibrahim, who pledged to stamp out cronyism when he came to power in 2022, according to Bloomberg in this report.
“The award process goes against Anwar’s commitment to good governance,” Asrul Hadi Abdullah Sani, a partner at consultancy firm ADA Southeast Asia, told Bloomberg. “This could impact investor confidence,” he added.
The contract award may have been announced and the government appears to be holding firm, saying that its decision is binding, but the turmoil in Malaysia’s telecom sector seems far from over. - Ray Le Maistre, Editorial Director, TelecomTV , 15/11/2024
More twists in 5G saga
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Saturday, 07 Dec 2024
MALAYSIA’S 5G journey has been problematic from early on, and it’s only getting worse.
Digital Minister Gobind Singh Deo recently addressed concerns that Digital Nasional Bhd (DNB) has been fully funded by the government and that RM16.5bil of taxpayers’ money is at stake.
Gobind said that the RM16.5bil budget across 10 years does not involve public funds apart from two things: an initial equity injection of RM500mil in 2021 and a shareholder loan of RM450mil in May 2023 from the Ministry of Finance (MoF).
The minister explained that the government’s total funding of RM950mil plus bank loans guaranteed by the government would be taken over and repaid by the telcos as part of the transition from a 5G single wholesale network to a dual network model.
That is certainly good news for the rakyat and well said by the minister, considering that up to now, all of that had not been articulated well by the government.
What that means is the governmenthas set a condition precedent for the second 5G network roll out: Pay us back first, before you can get your second network up and running.
It does look as if DNB will now have to write a cheque for RM500mil to the government and that its new shareholders, namely the local telcos, have to pay the government for the remaining stake it has in DNB.
These shareholders will also have to assume the government guarantees that had been given to secure DNB loans, which helped fund its RM5bil capital expenditure thus far.
Recall that the country’s major telcos – CelcomDigi Bhd, Maxis Broadband Sdn Bhd, U Mobile Sdn Bhd, Telekom Malaysia Bhd
(TM), and YTL Power International Bhd – had executed share sale agreements with DNB, with each to acquire a 14% stake in DNB by injecting about RM233mil each.
However, TM subsequently pulled out, although there is no indication that the incumbent telco has gotten back its money from buying the equity stake.
Also, the TM stake is meant to be redistributed to the other four shareholders of DNB, although it is not known if this has happened and the new share issuances paid for.
Now with U Mobile having won the bid to build the second 5G network, it too will leave DNB’s shareholding structure and it is also not known if it will get its money back.
Then there is the likely prospect that either CelcomDigi or Maxis may join U Mobile in the second 5G network, either via a partnership or a merger (read: buyout of U Mobile).
In that case, that telco will also pull out of DNB.
How will the shareholding structures of the two 5G networks pan out?
In the likely scenario that U Mobile, CelcomDigi and TM form a consortium for the second 5G network, Maxis may be tasked to lead the first network (namely DNB) and this would need to happen through buying out the exiting telcos as well as the stake held by the government, points out UOB KayHian Research.
DNB has a debt of around RM4bil that Maxis would have to deal with. It does not get any easier for CelcomDigi. In this scenario, they will be the ones having to fork out most of the money to build the second network.
After winning the second 5G network bid, U Mobile promised to lower its foreign equity to under 20%, which would require a significant amount of new equity to be issued.
All existing shareholders will also equally get significantly watered down if this happens.
Singapore’s Temasek Holdings’ unit owns 48% of U Mobile and is owed a significant sum as it has been one of the main funders for the telco. If the shareholder advances and preference shares are converted to equity, that stake in U Mobile could rise to around 80%, sources say.
On Wednesday, the Singaporean unit said it was selling down its majority stake in U Mobile to Mawar Setia Sdn Bhd, a company owned by Tan Sri Vincent Tan and Johor princess Tunku Tun Aminah Sultan Ibrahim. The statement made no mention of the value of the stake to be sold, but it did add that the Singaporean entity will hold a minority stake of 20% in U Mobile following the sale.
It is very likely that this transaction will be a precursor to a bigger deal in which Maxis is likely to buy out the other shareholders of U Mobile, including Tan.
CelcomDigi would face anti-competitive issues if it were to try to acquire U Mobile. All of this does tell us one thing: it is going to cost Maxis and CelcomDigi an abnormally large amount of money to play in the 5G space.
No wonder Kenanga Research downgraded the telco sector recently to “neutral” from “overweight”.
The research house says that it previously had expected uncertainties surrounding the second 5G network to be resolved, but it no longer holds this view due to the surprise win of U Mobile.
“It extends the uncertainty and increases the likelihood that resolution will take longer.”
Kenanga Research points out that it is waiting with bated breath to find out which telco will collaborate with U Mobile and the terms of the partnerships. It is also waiting to see the final ownership structure of DNB.
Yet another worry is the changes to DNB’s 5G access agreements with the telcos after the second network is launched.
Do note that DNB was created on the basis that it was going to be the only 5G network. As such its structure and financial planning was based on that, some of which will be in jeopardy when the second network brings in competitive pressures.
“U Mobile’s win has raised more questions and may potentially lead to a more convoluted outcome for the leading telcos,” posits Kenanga Research.
The research house is putting it mildly and diplomatically. - Star, 7/12/2024
This is after Singapore’s ST Telemedia - the largest shareholder - sells most of its stake to Mawar Setia Sdn Bhd.
After the exercise, announced yesterday, ST Telemedia’s share in U Mobile will shrink from 48.26 percent to 20 percent, with the balance of 28.25 percent then owned by Mawar Setia.
Mawar Setia is 70 percent owned by tycoon Vincent Tan and 30 percent owned by Tunku Aminah Sultan Ibrahim - the Johor ruler’s daughter.
Tunku Aminah’s effective stake in U Mobile will be 8.5 percent.
Her father, Sultan Ibrahim Sultan Iskandar - also the current Yang di-Pertuan Agong - owns 22.3 percent of U Mobile.
Combined, father and daughter will own 30.8 percent of the telecommunications company (telco), making them the largest shareholders.
Tan’s control of U Mobile through Mawar Setia is 19.8 percent, and his total stake in the telco through beneficiary ownership of other shareholders such as Berjaya Infrastructure and U Telemedia is estimated to be around 22.2 percent.
His niece Diana Tan owns a 0.28 percent stake in the telco.
This ownership restructuring comes after ST Telemedia agreed to pare down its shareholding in U Mobile in light of the telco being appointed as the operator of Malaysia’s second 5G network.
This was to lower foreign ownership of the telco.
ST Telemedia is a subsidiary of Singapore investment company Temasek.
Vincent previously defended Sultan Ibrahim, calling critics not to make wild allegations about the reigning Agong regarding U Mobile’s appointment as the country’s second 5G network operator. - Malaysiakini, 8/12/2024
COMMENT | The calibre and competence of two ministers in Pakatan Harapan - PKR’s Fahmi Fadzil and DAP’s Gobind Singh Deo came under close scrutiny when they gave contrasting and contradicting answers to questions over Digital National Berhad (DNB), the corporation to spearhead 5G.
One was shown up for his incompetence and lack of action.
Who came out tops in these two separate appearances could have been easily avoided if one of them had stuck to his area and not attempted to answer on behalf of the other. Let’s see.
First off the block was Communications Minister Fahmi, speaking in Parliament in response to a query from Pasir Gudang MP Hassan Abdul Karim on Nov 27.
He said when he joined the cabinet - as then communications and digital minister - it appeared that no one knew what was going on in DNB. It’s good to view the video for a useful perspective.
Some excerpts: “There were several things when I took over the portfolio that were horrifying and alarming, where we found that it appeared no one in the ministry or the Malaysian Communication and Multimedia Commission (MCMC) knew what was going on in DNB when I took over.
He added that even the then-treasury deputy secretary-general (Mahmood Merican) did not have “any visibility” despite DNB being a Minister of Finance (Incorporated) company.
Hassan had asked regarding allegations that the previous Muhyiddin Yassin administration had allocated RM16.5 billion of public funds for the first 5G network rollout by DNB in 2021.
Responding to Fahmi’s remarks, former DAP MP Ong Kian Ming asked: “What action steps did Fahmi take to clean up the ‘horrifying and concerning’ things that he found at DNB when he first became minister?”
What was Fahmi doing?
At the start of his short reply in Parliament, Fahmi said that DNB was no longer under him and it was better answered by the digital minister.
Fahmi was appointed as communications and digital minister on Dec 22, 2022, but less than a year later on Dec 12, 2023, Gobind was appointed digital minister, leaving Fahmi with the communications portfolio.
He should have stopped there instead of going on because Gobind was appointed more than 11 months ago. Fahmi had nearly a year to find out what happened at DNB but obviously did not.
It was, therefore, not just perplexing but totally unacceptable that Fahmi did not know what was happening at DNB even after one year as digital minister before he was replaced by Gobind.
Gobind’s reply on DNB demonstrated class, calibre, competence and composure when he addressed the issue in Parliament a day after Fahmi’s faux pas demonstrating his lack of knowledge. Interested readers can watch the video.
In clear, concise language he dispelled all doubts over DNB and publicly gave a clean bill of health to the government-sponsored company entrusted with the rollout of the first 5G network.
He said: “In January (this year) I was assigned to the digital ministry. I directed them to have an audit and due diligence - detailed. There were no extraordinary matters. The due diligence showed in terms of administration and finance everything is in order.”
“I emphasise that we had summoned them to explain. It (the rollout of 5G by DNB) is seen and recognised as one of the best rollouts in the world. We need the 5G infrastructure.”
Govt won’t lose money
Gobind went on to assure the government would not lose any money over DNB and that the second wholesale digital network would not proceed until the government’s spending on DNB was paid in full.
He said: “That RM16.5 billion is for 10 years. Until now, it does not involve government finances except for an equity injection of RM500 million in 2021, and a shareholders’ (government) loan of RM450m in May 2023.
“DNB also has bank loans guaranteed by the government. It has so far spent RM5 billion on the 5G network. The RM950 million (government funds injected) will be taken into account and paid back to the government.
“The second network will not proceed until this amount is paid back to the government. It won’t involve government spending at all.”
Under the original 2021 plans, DNB was supposed to have been the single wholesale network provider for the provision of 5G.
However, this was changed by the new coalition government which came to power in November 2022, announcing in May 2023 that a second operator would be appointed.
On Nov 1, U Mobile was controversially selected to be the second operator, the least qualified of the three mobile operators, the other two being CelcomDigi and Maxis, as I explained in this article titled “5G: Spectrum value, the Singapore link, and other issues”.
I also said that a single network would be more appropriate and would cost less because the infrastructure would not be duplicated.
Competition concerns would be allayed by the fact that the major telecommunication companies will have stakes in DNB, which will be independently run.
Gobind, in his reply also addressed concerns over the viability of DNB.
“There are no problems. DNB has tendered 41 projects so far. DNB will be in the industry, and I am confident it will succeed. Processes have been undertaken to ensure everything is in order. The success of DNB is seen by 82 percent coverage and 16 million customers,” he said.
Gobind also explained that under the shareholder subscription agreement (SSA) for DNB, TM and four others were to take 65 percent equity with the government holding 34.9 percent.
However, TM wanted more time and a second extension request was not agreed leading to TM no longer participating in the SSA.
But he pointed out that this is not the same as the access agreement for 5G which continues to be in place, implying that there will be no disruption to 5G services.
If only the Communications Ministry communicated in such a clear, concise, competent manner, Fahmi’s calibre and standing, now somewhat wobbly, would improve.
P
GUNASEGARAM continues to hope that the government will revert to the
superior model - the single wholesale network - which will lead to lower
costs and hence lower charges for us, the consumers. - Malaysiakini, 3/12/2024
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