U Mobile Sells DNB Stake, Boosts 5G

The Malaysian telecommunications sector is undergoing a notable transformation as U Mobile steps back from its stake in Digital Nasional Berhad (DNB), the state-owned entity responsible for Malaysia’s wholesale 5G network. This decision signals a significant shift in the country’s 5G rollout strategy, setting a new stage for competition, innovation, and infrastructure development within the evolving telecommunications landscape.

U Mobile initially acquired a 16.28% ownership in DNB as part of a collective agreement signed in late 2023, alongside major players like CelcomDigi, Maxis, and YTL Power International. This coalition, together with the Ministry of Finance (MOF), held the majority of shares. DNB, under government directive, was designed to serve as a neutral infrastructure provider, streamlining 5G deployment nationwide to accelerate adoption and ensure broad coverage. However, the recent decision by U Mobile to divest its shares—for a modest RM100,000—to the remaining shareholders marks a turning point that reflects broader changes in market strategy and policy direction.

The move by U Mobile to exit DNB is closely tied to the government’s appointment of the company as the primary executor of Malaysia’s “second” 5G network. Unlike the single wholesale network model that DNB promotes, U Mobile has taken on the more independent approach of building and deploying its own 5G infrastructure. This new strategy grants U Mobile greater autonomy in selecting technology partners, managing investment strategies, and defining service offerings. U Mobile’s partnerships with tech giants Huawei and ZTE to construct up to 7,000 5G sites across Malaysia demonstrate its commitment, further supported by CIMB Bank Berhad’s financing—showcasing institutional faith in the carrier’s standalone ambitions.

Pursuing a second 5G network is a direct challenge to the established centralized model. It disrupts the previously uncontested wholesale approach, injecting competition and encouraging innovation among providers. U Mobile aims to reach an 80% population coverage threshold within a year—a target that aligns closely with, or even complements, the existing coverage by DNB. The strategy seeks to foster faster deployment cycles, differentiate service quality, and create diverse consumer choices. At the same time, U Mobile retains a “5G Wholesale Access Agreement” with DNB, ensuring that customers experience uninterrupted service during the transition—a pragmatic move balancing ambition and network reliability.

From DNB’s perspective, U Mobile’s departure offers a cleaner operational structure. The remaining shareholders, including CelcomDigi, Maxis, YTL Power, and the MOF, can now consolidate their efforts on enhancing and optimizing the existing infrastructure without having to reconcile divergent strategies. Analysts suggest this could accelerate cost efficiencies and technical upgrades since the governance complexity is reduced. The government’s original intent to maintain DNB as a neutral provider is retained, but now with a leaner shareholder base fostering smoother decision-making processes and better alignment of objectives.

The dual-network approach adopted by Malaysia creates an intriguing policy and regulatory dynamic. Maintaining a wholesale network via DNB while permitting an operator-owned parallel network strikes a balance between centralized infrastructure efficiency and healthy market competition. This hybrid model could spur competitive pricing, broaden network choice, and drive technological innovation within the sector. Moreover, the planned phased divestment of MOF’s shares to other telecom players hints at ongoing evolution in ownership structures, which may further reshape the competitive landscape.

Ultimately, U Mobile’s exit from DNB symbolizes more than a routine portfolio adjustment—it reflects a strategic recalibration in Malaysia’s telecommunications sector. By focusing on its own nationwide 5G infrastructure, U Mobile gains full control over technological deployment and network innovation, positioning itself to respond swiftly to market demands and consumer expectations. Simultaneously, DNB’s strengthened shareholder cohort continues underpinning the country’s 5G foundation, facilitating a shared network critical to maintaining broad coverage and interoperability among various operators.

This diversification of 5G rollout models introduces greater dynamism into Malaysia’s digital ecosystem. Consumers stand to benefit from improved service options, expanded coverage areas, and an accelerated pace of next-generation technology adoption. However, the success of this dual-network strategy hinges on effective collaboration among all stakeholders, supportive regulatory frameworks, and sustained investment in cutting-edge technology. These elements together will shape Malaysia’s telecommunications trajectory and digital future, balancing centralized control with competitive innovation to meet the demands of a rapidly evolving market.

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