U Mobile has raised funds through CIMB Bank to build its second 5G network in Malaysia, as industry analysts predict the operator is likely to seek network partnerships with other operators to help defray the cost of 5G deployment.
U Mobile has secured the financial support of CIMB Bank (CIMB) for the construction of Malaysia's second nationwide 5G network.
In a controversial decision last November, the Malaysian Communications and Multimedia Commission (MCMC) selected U Mobile over larger rivals such as Maxis and Celcom-Digi to build the country's second 5G network to compete with Digital Nasional Berhad (DNB).
"We believe CIMB's financial backing will further strengthen our ability to ensure a rapid and cost efficient second 5G network rollout," said U Mobile CEO Wong Heang Tuck in an announcement on Wednesday.
Details of the financial support were not disclosed, but CIMB said that it is "ready to offer a holistic range of bespoke products and services apart from financing, extending to diverse areas including investment banking and treasury."
The bank has an ongoing partnership with U Mobile. In 2021, CIMB participated in a 1.2 billion Malaysian ringgit (US$266.4 million) facility to U Mobile, which was later increased to MYR1.4 billion ($310.8 million) in 2023.
Building the 5G network will be a struggle
As Malaysia's smallest operator, research analysts predict that U Mobile will likely have difficulty with the second 5G network rollout.
"It will be an uphill task for U Mobile considering its size and finances," said analysts at Hong Leong Investment Bank as quoted by The Edge Malaysia.
Analysts at Kenanga Investment Bank, meanwhile, predict that the network rollout may be delayed as the telco operator "must first finalize additional partnerships, appoint a 5G-advanced technology vendor, and secure financing, among other preparatory steps." They further speculated that U Mobile may seek a partnership with CelcomDigi given the history of collaboration between the two companies, although Maxis may be a "viable option" for U Mobile due to the small gap between their subscriber bases.
Citing industry sources at RHB Research, The Edge Malaysia said network collaborations with other mobile operators are in the cards for U Mobile.
"It is only logical to do so to defray network capital expenditures, which could range from MYR3 billion [$666 million] to MYR4 billion [$888.1 million], by our estimates," sources from RHB Research told the publication.
"The sharing of network infrastructure would expedite site deployments, allowing population coverage targets to be met more swiftly," they added.
Meanwhile, The Edge Malaysia, citing the same sources from RHB Research, said that U Mobile will deploy between 5,000 and 7,000 5G sites across Malaysia. U Mobile is expected to rely on upgrading existing 4G sites as well as building new ones.
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