KUALA LUMPUR (June 28): Telcos that take up a stake in Digital Nasional Bhd (DNB) will have the option to exit DNB by selling their stake to those who choose to remain in DNB.

Those who leave may then form an entity to provide the second 5G network or choose not to participate in the equity holding of the second 5G network provider at all.

Maxis Bhd (KL:MAXIS) said this in a bourse filing on Friday after the telco, together with YTL Power International Bhd (KL:YTLPOWR), CelcomDigi Bhd (KL:CDB) and U Mobile Sdn Bhd completed their respective share subscription agreements (SSAs), taking up a 16.3% stake each in DNB.

The option is provided in the respective shareholders’ agreement that Maxis, together with YTL, CelcomDigi (via Infranation Sdn Bhd) and U Mobile, inked with DNB and Minister of Finance Inc (MOF Inc), also on Friday.

"Under the shareholders’ agreement, an equity restructuring exercise shall take place after the MOF Inc's put and call option. At that stage, investor shareholders will split into one group consisting of shareholders that remain in DNB, and another group that will sell its equity in DNB to the shareholders who remain in DNB.

"The latter group of shareholders may proceed to form an entity to provide the second 5G network or choose not to participate in the equity holding of the second 5G network provider," Maxis said in its bourse filing.

"The shareholders’ agreement sets out the terms for the transition to a dual 5G network model, including a put option for MOF Inc to sell its ordinary shares and transfer its shareholder advance in DNB, and a corresponding call option for the telcos to buy a proportion of MOF Inc's shares in DNB and takeover the shareholder advance.The prepayment for products and services under the 5G access agreement (AA prepayment) that the telcos inked with DNB previously — about RM233.23 million each — will be treated as a shareholder advance to DNB, giving the telcos the same rights accorded to an ordinary shareholder in DNB.

Each ringgit of the shareholder's advance will entitle the payer to one vote, Maxis said.

DNB, in a separate statement, said the four telcos or mobile network operators (MNOs) have collectively acquired approximately 65.1% stake in the 5G special purpose vehicle, while the Minister of Finance (Incorporated) retains about 34.9% shareholdings and a special share.

"This follows the satisfaction of the conditions precedent under the SSAs on June 20, 2024 for all four MNOs to increase their equity stake in DNB. For Telekom Malaysia Bhd (KL:TM), the conditions precedent longstop date is Aug 21, 2024. Assuming TM successfully completes the SSA, MOF Inc’s stake will reduce to 30%, with the MNOs collectively holding a 70% stake in DNB," DNB said.

In separate statements, YTL, CelcomDigi and U Mobile confirmed they have each completed their SSA to take up their respective stakes in DNB.

YTL Power managing director Datuk Seri Yeoh Seok Hong said the company, through its investment in DNB via YTL Communications Sdn Bhd, is fully supportive of the effective implementation of the 5G dual wholesale network model announced by the government, as part of its commitment to play a leading role in driving Malaysia’s digital agenda.

"As the pioneer to launch 5G in Malaysia, YTL Communications through Yes 5G has and continues to champion accessibility and affordability of 5G services for all Malaysians, including consumers, businesses and industries. We are ready to accelerate the successful rollout of 5G nationwide, which is the bedrock to leapfrog industries and drive economic growth," he said.

CelcomDigi CEO Datuk Idham Nawawi, meanwhile, said the group is "eager to move into the next phase of transitioning to the 5G dual network model and to participate in the upcoming process to build the second 5G network". He also said CelcomDigi is in a strong position to lead the development of the second 5G network for the country.

U Mobile CEO Wong Heang Tuck said the group is "is delighted to have completed the SSA and signed the shareholders' agreement with DNB to pave the way for the nation’s transition to a dual 5G network model". "With the strength of our track record, expertise and futureproofed network infrastructure, we believe we are well-positioned to roll out Malaysia’s second 5G network,” he added.

The government announced the transition from the single wholesale network model for 5G to the dual network model in May last year.

Subsequently, the SSAs were executed in December between DNB and the telcos — CelcomDigi through Infranation, Maxis via Maxis Broadband Sdn Bhd, U Mobile, Telekom Malaysia Bhd (KL:TM) and YTL Communications — for the five to take up an equity stake in the entity. 

The SSAs essentially gave the MNOs a collective 70% equity stake or 14% each in DNB. The telcos also agreed to inject RM233.23 million each — which amounts to a total of RM1.16 billion — to meet DNB’s funding requirements.

MOF Inc, which retains a 30% stake in DNB, may eventually dispose of the 30% stake and hold only a special share in DNB.

Read also:
Maxis, CelcomDigi, U Mobile and YTL Power buy 16.3% stake each in DNB instead of 14%, as TM yet to take up its portion
CelcomDigi wants to lead second 5G network after taking up 14% stake in DNB

This story has been updated with details from DNB's statement.