The RM11 billion that Digital Nasional Bhd (DNB) says Malaysia will spend on Ericsson’s 5G build splits unevenly. Only RM4 billion of it goes to Ericsson itself, for network equipment, deployment services, and ongoing maintenance and network management. The remaining RM7 billion, roughly, pays other parties, mostly for tower rental and fibre leasing across 10 years. DNB laid out the breakdown in a statement on July 8.
The government-owned vehicle running the national rollout also said Ericsson’s figure is “around RM700 million lower than the total cost of ownership of the next closest bid”. DNB had announced the appointment a week earlier.
Who pays
DNB’s answer is that taxpayers will not. Ericsson (Malaysia) Sdn Bhd has agreed to arrange financing for the equipment, with money coming from foreign and domestic financial institutions. DNB will cover its other operating costs through Sukuk programmes backed by future cash flow from its wholesale business with mobile network operators, and that same cash flow is what repays the financiers. “Accordingly, there will be no government funding required for the 5G network roll-out,” DNB said.
More than 60% of spending on network infrastructure, it added, will directly benefit bumiputera interests in telecommunications and bumiputera contractors. Ericsson has also committed to knowledge-economy contributions, including job creation and 5G skills, which DNB values at RM4 billion across the contract’s life.
How the tender ran
Ernst & Young Consulting Sdn Bhd structured the process. Four panels took part, drawing on about 50 local and international experts from 10 countries with current 5G rollout experience.
Fourteen network equipment providers were assessed at the start. Eight made the shortlist, and only four of those submitted bids. Shortlisting looked at five things: proven 5G deployments, enhanced security, a Malaysian presence and ecosystem, locally based resources ready for immediate use, and a plan to pass knowledge to domestic affiliates.
Bids were then scored on three components. Ericsson ranked first on all of them, DNB said. The technical score covered 5G capabilities, cyber and network security, and operations and maintenance. The commercial score covered the financing proposal and total cost of ownership. The socio-economic score covered local development and impact. The tender committee and DNB’s board then went through the results at length. “The strictest standards of governance were adopted throughout the tender process as advised and facilitated by EY Consulting,” the company said.
Calls for disclosure
Opposition leader Datuk Seri Anwar Ibrahim recently urged the government to make the details of the Ericsson contract public.
On timing, DNB and Ericsson say they are on track to launch the network in parts of Kuala Lumpur, Putrajaya and Cyberjaya by December 2021. The goal is to reach 80% of the population nationwide by 2024.
Sources
- DNB: Ericsson's RM11b 5G bid is RM700m lower than nearest competitor
- DNB: Ericsson's RM11b 5G bid is RM700m lower than nearest competitor
Sources
- DNB: Ericsson's RM11b 5G bid is RM700m lower than nearest …
- DNB: Ericsson's RM11b 5G bid is RM700m lower than nearest…
