SHORT OF MONEY? NAJIB REGIME CHARGES TELCOS RECORD RM2.7BIL IN SPECTRUM FEES

PETALING JAYA – The Government has finally set a new benchmark for the sale of spectrum in the country, and in the first round, could raise about RM2.7bil in one-off fees for two blocks of bandwidth in the 900MHz and 1,800MHz spectrums from the four mobile players.

This would be the first time the Government, via the Malaysian Communications and Multimedia Commission (MCMC), is charging players a lump sum fee for usage of the two spectrums, with telecommunications players having paid usage fees for the spectrum all these years.

Spectrum is a prized commodity, and globally, many countries have imposed huge fees for its usage on telecoms companies via a bidding process that has earned the Governments billions of dollars.

This new pricing structure is part of MCMC’s plan to refarm spectrum so that every player has adequate spectrum to offer services to consumers.
Under the new structure, the yearly fees have been capped, unlike the current model where the yearly fees keep going up when more base stations are built.

The new regime gives players certainty that they can use the spectrum for 15 years unlike the current yearly renewal model.

With this, the yearly fees for usage of spectrum that the Government will collect over 15 years amount to about RM3.5bil, or about RM230mil a year from the four players.

“It is a reasonable amount, not too outrageous like that imposed by some countries. The capping of the yearly spectrum usage fees encourages players to roll out more base stations. The more they roll out, the better it is for them as the fees are capped,” said an industry expert.

Although the pricing is reasonable, “there is still fear that players may pass the cost to consumers and that will be disruptive to the growth of the market,” added an industry executive.

Yesterday, the top-three cellular companies by market share announced to Bursa Malaysia that they had received a letter of offer dated Aug 30 from the regulator telling them of the new bandwidth pricing.

The payment of the lump sum or first payment for the spectrum assignment is due on Nov 1, they told Bursa Malaysia.

Axiata Group Bhd, which owns Celcom Axiata Bhd, and Maxis Bhd in separate announcements said yesterday that they had to pay RM816.7mil (a one-off fee) each for the two blocks of 900MHz spectrum and two blocks of the 1,800MHz spectrum.

Their yearly fees for both the spectrum blocks are RM70mil each.

Digi.com Bhd said its portion for the lump sum payment for both blocks is RM598mil, with a yearly fee of RM51mil.

U Mobile Sdn Bhd, the fourth player, had remained silent on the amounts. But industry experts believed the lump sum payment was about RM500mil and its yearly fee about RM40mil.

Celcom and Maxis have 2x10MHz of the 900MHz spectrum, and 2X20MHz of the 1,800MHz bandwidth each.

Digi and U Mobile, meanwhile, have 2x5MHz and 5MHz of the 900MHz bandwidth, and 2X20MHz and 15MHz of the 1,800MHz bandwidth, respectively.

This charging of a one-off fee will ensure only the “fittest” will be able to remain in the game, according to experts. In the past, MCMC had issued too many companies with spectrum, some of them had not used the spectrum to offer services to consumers. – ANN