Malaysia hands 5G spectrum to little-known firm controlled by politically linked tycoon

Malaysia awarded the 5G spectrum to several players including Altel, a firm controlled by tycoon Syed Mokhtar al-Bukhary. PHOTO: THE STAR/ASIA NEWS NETWORK

KUALA LUMPUR - Malaysia has quietly awarded the highly sought-after 5G telecommunications spectrum to several players, including the little-known Altel, a firm controlled by the reclusive but politically connected tycoon Syed Mokhtar al-Bukhary, seemingly without an open tender previously promised.

The May 15 decision, signed off by Communications and Multimedia Minister Saifuddin Abdullah, went unannounced to the public and appears to be the first major reversal of infrastructure policy by the three-month-old Perikatan Nasional (PN) government.

Prior to being ousted in February, the Pakatan Harapan (PH) administration had promised an open tender to allocate the spectrum - reserved frequencies to avoid interference of transmission - but encouraged industry players to form a consortium that would avoid duplication of heavy expenses in rolling out infrastructure for the next generation broadband service.

"The commission will take immediate action under the Act and laws on relevant subsidiaries to implement the spectrum assignment to all licence holders," Datuk Seri Saifuddin, who was foreign minister under PH, said in the order to regulator Malaysian Communications and Multimedia Commission (MCMC).

Despite much fanfare concerning the potential of 5G services - which could be up to 20 times faster than current 4G mobile connections - the signed orders were only uploaded to the MCMC website in a buried section on spectrums, with no media statements issued since.

The rollout of 5G is a key plank in the RM22 billion (S$7.2 billion) National Fiberisation and Connectivity Plan, which PN has promised would continue despite the change of government.

A check on the MCMC website found that no tenders were called, and executives from various telecoms firms also told The Straits Times they were not aware of any invitations to bid for the spectrum.

"It is strange because some of the companies that were awarded are public listed. They would have to announce it to the stock exchange once they are aware as there are also hundreds of millions in fees involved," one executive who spoke on condition of anonymity said.

Leading mobile service providers Maxis, Celcom and DiGi were awarded two bands of 10 megahertz (2x10MHz), while Altel, despite being a minor player, was given 2x5MHz. Telekom Malaysia, the state telecommunications firm which largely operates fixed line services, was allocated 2x5MHz.

Telcos must pay an upfront sum as well as annual fees for spectrum allocations. Although not fixed, some firms have paid up to RM600 million upfront, with RM51 million in annual fees for their allotments which last for over 15 years.

Maxis proposed to MCMC during last year's stakeholder engagements on 5G that a 2x10MHz band in the 700MHz range allocated last month be charged at RM323.3 million upfront with a RM27.8 million annual fee.

However, it is not known if any fees have been agreed for the 5G spectrum. The Communications and Multimedia Ministry did not respond to requests for comment.

Altel, a subsidiary of Tan Sri Syed Mokhtar's Puncak Semangat, was awarded the most amount of spectrum in the 2.6GHz band to deploy 4G services by MCMC in late 2012. Instead of building up its own infrastructure, it leased the spectrum to other telcos and piggybacked on Celcom to offer services as a mobile virtual network operator.

The government's role in how Mr Syed Mokhtar built his business empire to become one of Malaysia's richest men has been criticised for decades. The tycoon runs various monopolies based on government licences such as in the distribution of rice and inspection of road vehicles, and controls the postal service, several ports and media companies.

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