Zafrul Sheds Light On Rm11b 5g Contract With Ericsson

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The RM11 billion cost for the deployment of Malaysia’s fifth-generation (5G) network and ecosystem is lower than the initial estimate of RM15 billion,  Finance Minister Tengku Zafrul Abdul Aziz said.
Zafrul said that the National 5G Task Force report which estimated a budget of RM7.5 billion only takes into account the cost of network coverage and not any investments needed in that capacity.
“The task force report also stated that the listed cost was an indicative estimate and not definitive, which was dependent on a few subjective assumptions such as negotiations with vendors.
“Based on the listed estimate, the collective implementation of the 5G network by all existing mobile network operators is likely to cost more than RM30 billion for the country as a whole, compared with only RM11 billion for Digital Nasional Bhd.
“In fact, the total cost of ownership of RM11 billion for the next 10 years is significantly lower than the initial estimate of the 5G network cost, which was estimated at RM15 billion,” Zafrul said in a written reply to Parliament on Monday.
He said this in response to a question from Lim Lip Eng (Pakatan Harapan-Kepong), who requested clarification on the RM11 billion contract between Digital Nasional and Ericsson, which is an additional RM3.5 billion from the initially estimated RM7.5 billion in 5G procurement.
Rigorous tender exercise
In July, it was reported that the design and development of the national 5G network will be undertaken by Ericsson at a total cost of RM11 billion, including tower rental and fibre leasing.
Digital Nasional, a government-owned special purpose vehicle set up to build, own and operate 5G infrastructure, said that a rigorous tender exercise was initiated in March 2021.
Zafrul clarified that the tender process had begun with 14 network equipment provider companies, which were identified through market surveillance.
“From the list, eight companies were then invited to submit an expression of interest based on two criteria:
“First, proven experience in implementing 5G networks.
“Second, local presence with permission to operate or having (existing) operations in Malaysia,” Zafrul said.
Highest ratings
He said that out of the eight providers, only four had submitted bids.
He added that Ericsson had received the highest ratings based on three criteria when choosing the bidder: technical and capability, commercial and socio-economic aspects.
“From a technical perspective, Ericsson had suggested a ‘future-proof’ and sustainable network, with precise cybersecurity functions to meet Digital Nasional’s objective of achieving 80 percent coverage of populated areas by 2024.
“In terms of cost, Ericsson had offered the most competitive pricing and socio-economically, Ericsson had committed to the most impactful socio-economic development programmes, including using local and bumiputera vendors,” he said.
Lim had also asked Zafrul on the action taken by the MACC regarding the contract between Digital Nasional and Ericsson.
Free to investigate
Zafrul said that MACC was free to conduct investigations if there was evidence of misconduct in the conduct of the 5G tender process.
“However, the Finance Ministry will not approve if MACC were to conduct investigations on the basis of prejudice,” he said.
He added that on the basis of transparency, Digital Nasional held an initial briefing session with several MPs in July regarding the 5G procurement.
He said 11 MPs were present during the meeting, including Ahmad Faizal Azumu (PN-Tambun), Fahmi Mohamed Fadzil (Harapan-Coastal Valley), Nurul Izzah Anwar (Harapan-Permatang Pauh) and Ong Kian Ming (Harapan-Bangi).
Previously, Pejuang Youth chief Abu Hafiz Salleh Hudin urged the government to scrap Digital Nasional, claiming it would incur losses to taxpayers.
Hafiz suggested that instead of forking RM15 billion to set up Digital Nasional, the government should utilise the existing local telecommunications providers to develop the network.  - Mkini

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