The Malaysian government awarded Sweden's Ericsson an 11billion ringgit ($2.6 billion) contract to design and build its 5G telecommunications network. This is a snub to the Chinese competitor Huawei Technologies. Malaysia aims to make 5G connectivity available by end 2021 and cover 80% of the population by 2024. Initially, services are to be rolled out in Kuala Lumpur and Putrajaya as well as multimedia hub, Cyberjaya, within 2021.
The Edge reported in April that Digital Nasional - a Finance Ministry entity entrusted with owning and operating the 5G network -- had invited eight vendors to participate in the tender: Ericsson, Huawei, ZTE, Cisco, NEC, Nokia, Samsung and FiberHome. Malaysia has not shown the same aversion to Huawei as the U.S. and several other Western countries, which have blocked it from bidding for government contracts and especially 5G projects over concerns about security and links to Beijing. In February, Malaysia decided to partner with Huawei on a cybersecurity lab.
Earlier, in October 2019, Huawei was brought in as a 5G hardware supplier for Maxis, Malaysia's largest mobile provider by subscribers. Under the deal, the Chinese company was to provide 5G radio equipment, services and expertise for Maxis' network.
But the Maxis agreement was reached assuming that 5G spectrum allocations would be awarded to individual telecommunications companies. Prime Minister Muhyiddin Yassin's government, however, shifted away from the traditional allocation method by establishing Digital Nasional to own the 5G assets and spectrums.
Digital Nasional said Ericsson will handle the design and development of the country's end-to-end 5G network. The agency said it will securitize future cash flows from its wholesale business via Islamic bonds to finance all other network operating expenses and repay all vendor financing arrangements. The 11-billion-ringgit arrangement includes tower rental and fiber leasing, of which more than 60% will benefit local contractors over the next 10 years.
Ericsson currently deploys 86 live 5G networks and has been involved in Malaysia since 1965.
Meanwhile,
Anwar
wants the government to make public details of the contract as the cost for it
will be borne by the rakyat. He said he wants the project to be questioned so
that there’s no chance of corruption, abuse of power, and excessive payment of
commissions. Anwar also claimed that Huawei Technologies could have done the
job for RM5 billion.
Digital
News Asia reported that a source close to the matter claimed that the
RM11 billion budget is lower than what Huawei had bid, and Ericsson had brought
down their pricing substantially after negotiations.
The National
5G Task Force had estimated that the overall cost to deploy 5G would be
about RM7.5 billion inclusive of other upgrading costs covering core network,
radio and IT systems. The estimate assumed that a 5G radio costs RM510,000 per
site and RM5.1 billion is required for 10,000 sites to achieve 90% population
coverage on the 3.5GHz band.
Whether it is RM11 billion, RM7.5 billion or RM5 billion, it would be useful for the Government to be transparent on the details. Weren’t there some criteria? And what are the details of how the award came about on technical and commercial basis? Some independent body should have given a report on the award to allay fears of an over the top award. With no detailed review by Parliament, it is difficult to answer the question posed at the top!
Source: www.huawei.com
References:
Malaysia picks Ericsson over Huawei to build 5G network, P Prem Kumar, 1 July 2021, https://asia.nikkei.com
Anwar questions
Ericsson’s RM11 billion 5G contract, claims Huawei could to the job for half
the price,
Alexander Wong, 7 July 2021, www.soyacincau.com
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