Malaysia’s billion-dollar 5G roll-out stumbles as deal breaks down between powerful telcos, state-owned operator

KUALA LUMPUR:  The mess surrounding Malaysia’s ambitious roll-out of its superfast fifth-generation cellular network, or 5G, has got messier.

A complex government-sponsored settlement agreement reached in early December between state-owned 5G operator, Digital Nasional Bhd (DNB), and the country’s five private mobile telecommunications companies has broken down.

Prime Minister Anwar Ibrahim’s government brought the warring factions together in a compromise that would potentially see the private telcos taking a stake in DNB, or forming a separate joint venture to become Malaysia’s second 5G operator to provide competition in the country’s booming mobile telecommunications sector.

Government officials and industry executives have acknowledged that after more than four months, both sides have yet to agree on so-called condition precedents (CP), legal parlance for events that must take place before a contract can come into effect.  

The CPs include the appointment of directors who would represent the private telcos in DNB, and the completion of three confidential audits on the state-owned entity by external experts.

The audits would cover its financial standing, due diligence on large contracts the company has signed and a technical evaluation of its 5G systems.

“The audits are ongoing, but there is no agreement on the composition of the board. Nothing is moving because telcos are starting to have doubts on the path forward,” acknowledged a senior Finance Ministry official, who is monitoring the 5G situation. 

The protracted impasse between DNB and the country's politically powerful private telcos is presenting the Anwar government with one of its most complex economic policy challenges and could have a huge impact on