DIGITAL Nasional Berhad (DNB) has announced yesterday that it has chosen Swedish telecommunications firm Ericsson over seven other vendors to deploy Malaysia’s nationwide fifth generation (5G) network and ecosystem, concluding a tender exercise that started in March.
Ericsson has beaten the leading contender Huawei Technologies, as well as Nokia, ZTE, Cisco, NEC, Samsung and FiberHome.
Ericsson appointment comes as a major snub for Huawei, which has run a massive campaign to become Malaysia’s 5G network and equipment vendor since 2019. It was the vendor for multiple telcos during the 5G Demonstration Project (5GDP) in 2020.
In October 2019, Huawei was appointed as a 5G hardware supplier for Maxis, providing radio equipment, services and expertise for Maxis’ network. It was also Telekom Malaysia (TM) and Celcom’s main technology partner during the 5GDP.
The roller coaster ride
It has been a roller coaster ride for the country when it comes to 5G. First, the plan was for allocations to be awarded to individual telcos, and that the choice of hardware suppliers would be up to the respective spectrum holders. The plan became the basis for 5GDP – like a beauty contest, to choose the telco(s) most deserving of the prized spectrum.
Later, it was announced that MCMC would allocate the spectrum to a single entity comprising a consortium formed by multiple licensees, instead of individual licensees.
Then the change in government happened.
Under the new government, the Jalinan Digital Negara (JENDELA) plan announced in September 2020 effectively deferred 5G implementation. That also didn’t last long, when the government finally changed its mind again, and decided to bring 5G forward by a year to the fourth quarter of 2021. It later established DNB as the single special purpose vehicle to receive 5G spectra, and to build, operate and lease 5G infrastructure to new and existing telcos.
The Chairman of the Malaysia Communication and Multimedia Commission Dr. Fadhlullah Suhaimi Abdul Malek had stressed in February that all licensed telcos will have equal access to infrastructure. However, the establishment of DNB and its tender exercise offers the deal to design and build the entire end-to-end 5G network to a single vendor. It triggers the vendor lock-in risk, not a wise thing to do during this highly uncertain times.
Malaysia’s 5G Development Partner
As DNB’s 5G development partner, Ericsson will undertake the design and build of the country’s end-to-end 5G network at a total cost of US$2.6bil (RM11 bil). This is lower than the RM15 billion initially estimated during the announcement of DNB’s establishment in February.
The design and development of end-to-end 5G network will comprise the core, radio access and transport network (RAN), operation and business support systems (OSS/BSS) and managed services. The RM11 billion investment also includes tower rental and fibre leasing, of which more than 60% is expected to benefit Bumiputera and other Malaysian contractors over the next 10 years.
In addition, Ericsson will also undertake capacity building and innovation programmes to support local vendor development and participation as well as to boost 5G adoption among the public.
Meanwhile, Ericsson has undertaken to arrange financing for the supply, delivery, and management of the entire 5G network, DNB said. DNB will securitise future cashflows from its wholesale business via Sukuk programmes to finance all other network operating expenditure and to repay all the vendor financing arrangements, it added.
It is expected that folks in Kuala Lumpur, Putrajaya and Cyberjaya will be able to enjoy 5G by the end of this year. DNB plans to begin deployment in 5 major cities and districts in Selangor, Pulau Pinang, Johor, Sabah and Sarawak in 2022, before covering 17 cities and rural areas in 2023 onwards. It aims to reach 80% population coverage by 2024.
