Malaysia’s Single Wholesale Network Approach to Rolling Out 5G Calls for CSPs to Consider the Road Ahead

Digital Nasional Berhad (DNB) announced in September 2022 that four Communication Service Providers (CSPs)—Digi Telecommunications, Celcom Axiata, YTL Communications, and Telekom Malaysia have agreed to take up a combined stake of 65% in the state-run 5G agency, leaving the government with the remaining 35%. This proves a monumental step forward for the country, which has seen multiple delays to its 5G rollout plans due to strong initial pushback from the CSPs over the government’s plan to deploy 5G through a Single Wholesale Network (SWN) for the country. Meanwhile, two of Malaysia’s largest CSPs, Maxis and U Mobile, have declined the opportunity to own equity in DNB and instead have signaled their intent to purchase 5G wholesale capacity from DNB for their 5G services. The implementation of an SWN for Malaysia hopes to significantly reduce costs required for each telco to build its own 5G infrastructure, and consequently allow for low-cost consumer and prosumer 5G packages. Through this, individual CSPs will have access to the retail licensing to serve customers.

Malaysia’s six CSPs are Maxis, Digi, Celcom Axiata, YTL Communications, Telekom Malaysia, and U Mobile. Revenue for the majority of CSPs experienced an upward trajectory in 2022, excluding Digi Telecommunications. The oldest telecommunications company in Malaysia, Celcom Axiata, saw a 5.8% increase from January to September 2022, with total revenue amounting to MYR13.2 billion (~US$2.8 billion). Another large CSP, Maxis, saw its revenue climb 6.6% Year-over-Year (YoY) to MYR2.4 billion  (~US$512 million). Revenue for other CSPs, such as YTL Communications and Telekom Malaysia, were up 25.8% to MYR660 billion (~US$140 billion) and 11.8% Year-to-Date (YTD) to MYR6 billion (~US$1.3 billion), respectively. Digi Telecommunications’ revenue, in contrast, declined 1.1% YoY to MYR1.3 billion (~US$280 million).

Nationwide coverage for 5G presently stands at 33%, with the brand Yes (launched under YTL Communications) as the main operator responsible for the rollout and maintenance of 5G in the country. Backed by DNB, current 5G coverage areas include Kuala Lumpur, Putrajaya, Selangor, Penang, Johor, and Perak. With the new agreement between the four telcos to take up equity in DNB, the agency’s rollout target is 40% population coverage by the end of 2022 and 80% by the end of 2024. Since the initial rollout of 5G by Yes in December 2021, the CSP has made steady efforts in both the consumer and enterprise 5G sectors. Pertaining to mobile services, “5G for All” was launched under Yes with Infinite and Infinite+ mobile plans. These services are cheaper and faster than existing 4G plans in the country. In September 2022, Yes established new wireless fiber 5G plans in Penang, the country’s first 5G Fixed Wireless Access (FWA) plans in Malaysia. Encompassed within this plan is a free 5G portable router that provides unlimited 5G data to homes without the need to install a wired broadband.

Conversely, enterprise 5G has begun to revolutionize the way that the healthcare industry in Malaysia operates. Enabled by 5G, real-time monitoring and sensor innovations can be used in preventative care and telemedicine. For example, a smart healthcare initiative that taps into enterprise 5G was established through Yes’ partnership with First Ambulance, Malaysia’s largest ambulance provider, with hopes to enhance the speed and precision of emergency healthcare. As Malaysia’s first 5G smart ambulance, patient data, such as Electrocardiogram (ECG) telemetry and ultrasounds can be sent in real time to emergency room staff for speedier diagnoses and to prepare for the patient’s arrival at the hospital.

Malaysia claims that an SWN model will allow 5G to be rolled out at a low cost, as it seeks to create the world’s first six-radio Multi-Operator Core Network (MOCN). Given that the six operators will share the Radio Access Network (RAN) infrastructure and 5G bandwidth, each telco will be spared the costs of building its own 5G infrastructure. This will consequently allow 5G to be cheaper for consumers and prosumers. Furthermore, an SWN approach diverges from the competition on coverage among CSPs and shifts toward service-based competition. DNB claims that service-based competition should spur innovation in technological solutions, such as FWA or cloud-based services tailored to predictive maintenance, Augmented Reality (AR) or Virtual Reality (VR) gaming and security. This should, theoretically, motivate CSPs to differentiate themselves based on their respective services.

Looking at the opportunities that 5G will bring to Malaysia, there are several avenues that CSPs can explore to build their competitive edge against their rivals. For instance, TM One, the Business-to-Business (B2B) arm of Telekom Malaysia has set out smart city aspirations enabled by 5G. These solutions include adopting multiple Internet of Things (IoT) sensors to power TM One’s smart street light systems, developed to boost nationwide safety and conserve energy at the same time. Using Artificial Intelligence (AI), TM One has also established its smart parking system, which helps users search for and book parking spaces. This initiative was first enabled by 4G, though TM One is currently piloting the solution using 5G in Subang Jaya. Another key opportunity for CSPs to distinguish themselves from their competitors will be within the industrial sector. Specifically, the Industrial IoT (IIoT) market will also progress with the potential of 5G-enabled network slicing that has yet to be explored in the country. However, this will require CSPs to work with data centers and analytics. Related to commercial 5G, in contrast, the focus for telcos should be to build consumer content (video, games, music) to allow the development of new applications.

To prepare for the timely rollout of 5G services, Celcom Axiata, Digi, Maxis, U Mobile, and YTL have now upgraded a total of 1,923 base stations. Malaysia’s SWN approach is undoubtedly a unique one and the first of its kind in the Asia-Pacific region. If the SWN approach enables 5G to be executed in a comprehensive manner for Malaysia’s urban and rural communities, the payout could be tremendously rewarding.