Malaysiakini : Critics charged that this was to extract the maximum possible benefit
of the fast-aging 4G service which is being replaced across the world
by the much more efficient 5G. The telcos had spent a lot of money on
the 4G rollout and now are reluctant to spend more on 5G, with their
earlier plan to jointly implement 5G being delayed.
the government to set up Digital Nasional Bhd, or DNB, which has already
contracted to procure equipment and finalised plans to roll out 5G,
even providing a timetable for that.
But the telcos have been
fighting a rear-guard action against this, complaining that it will
reduce competition because there is only a single provider of 5G
But paradoxically, two of the big three are merging and
have obtained MCMC’s approval to go ahead with that. What happens to
competition then? Won’t it be substantially reduced as the entire telco
market will be dominated by just two players?
MCMC’s decision an anomaly
a decision by the MCMC is an anomaly in the current market where three
players basically control mobile and four (the three of them plus TM)
broadband, concentrating further pricing power in the industry.
fact, four of the largest mobile operators (including U Mobile among
the three mentioned), objected to the stake they were offered in 5G
company DNB, which was set up by the government, in a letter to the
Reuters reported in May
their objections to the government's proposal, which offered up to 70
percent of the country's sole 5G network operator spread among a wider
group of companies.
This raised the risk of delays as the government aimed to wrap up discussions on the stake sales by end-June, Reuters added. Any delay benefits the 4G operators, which means high rates will remain for longer.
would not be able to justify a passive minority investment in this
venture without being able to exercise influence and control to
safeguard our investment," the letter said.
That is clear
indication that they do not want pricing power to be taken out of their
hands, not necessarily something which is in the interests of the
country or consumers. If a single utility providing 5G at lower prices
is possible, then that option should be examined.
In March, the
government offered all telecom firms in the country a combined equity
stake of up to 70 percent in DNB, which is tasked with deploying 5G,
after wireless carriers complained about its plan for a state-run
network that will charge telcos for 5G access rather than allocating
The mobile operators said the plan would undermine
competition and called for creating a second 5G network, but in March
said they would be open to the government's alternative proposal for
equity stakes in DNB, Reuters reported.
In light of that, it is
indeed strange that the MCMC has given the nod for the Celcom-Digi
merger to take place and perplexing that two of the three main players
want to merge, which will have the clear effect of reducing competition
in the field.
Evidence everywhere clearly indicates that when
oligopolistic power is given to companies in a certain industry and
regulation is weak, then the end loser most often is the consumer who
pays much higher prices for goods and services provided.
case of telcos, they pay some of the highest dividends and offer some of
the best returns on equity among the large companies, a clear
indication that they are in a comfortable industry segment resistant to
reducing prices. And even to technological changes such as 5G, which
will lower costs and prices.
Malaysia needs far better and more
integrated regulation, making use of several agencies if necessary to
ensure the ground is fully covered and there is true independence, both
of which will help lead to a professional decision.
In making this
unfortunate decision to allow a merger, MCMC certainly appears to have
largely ignored the deleterious effects of reducing competition and the
extreme concentration of pricing power in the hands of two companies.