Telco industry back to the drawing board after spectrum assignment cancellation

The retraction of the 700MHz spectrum band assignment yesterday means that the industry will have to go back to the drawing board in the deployment of the national 5G network.

The distribution would have otherwise been by blocks of 2x10MHz each to Celcom Axiata Bhd, Digi Telecommunications Sdn Bhd and Maxis Broadband Sdn Bhd, while Telekom Malaysia and Altel Communications would receive 2x5MHz each.

In a note, Kenanga Research said while no details were made known about the costs involved with the distribution of the frequencies, the above allocations could have otherwise derailed the previous vision to establish a consortium to manage the national 5G deployment.

“Retracting the 700MHz spectrum assignment will for now return the industry to the drawing board in the deployment of the national 5G network.

“Whether a consortium or individual telecommunication companies (telcos), the awardee(s) would have to bear the brunt of spectrum costs and incur higher capital expenditure (capex) spending to build the necessary infrastructure for the new network,” it said.

The research house said it believed that the return on investments on running the 5G network could be limited in the near term, only seeing enterprise adoption as commercial demand could be limited by the narrow network coverage and the affordability of 5G device and subscription plans.

It said there was also a possibility that the readiness and commercialisation of the network would be delayed towards 2021 from the initial target of third quarter this year, partly faulted by the COVID-19 pandemic and movement control orders.

In a separate note, AmInvestment Bank said the government might be reviewing the overall spectrum allocation process to enable a more efficient utilisation and integration to the usage of scarce spectrum resources in the race to develop highspeed broadband capability for the country.

“At this stage, we are uncertain if the Malaysian Communications and Multimedia Commission (MCMC) has discontinued its pragmatic approach to encourage collaboration amongst 5G operators.

“Being negative on the earlier direct ministerial award without tender, we are neutral for now on this turn of events pending further clarification from the MCMC,” it added. - BERNAMA