Malaysia to announce spectrum fee details in four weeks

• Decision could be made as early as end-June
• Fees vary, but may cost about 4-8% of telco’s revenue

 
MALAYSIA’S Communications and Multimedia Ministry is expected to announce the details of the upfront spectrum assignment fees for mobile operators within the next four weeks, said sources.
 
These would include the amount the mobile operators will have to pay to the Malaysian Government for their spectra, as well as the number of instalments the fees would have to be paid in.
 
“Over the past few months, the telcos have been in engaging with the Government on how the advance spectrum assignment fees can be implemented,” said a source who requested anonymity.
 
“The decision has not been made yet, but we expect an announcement relating to the upfront spectrum assignment fees to be made over the next four weeks, perhaps as early as the end of this month.”
 
Once the details are announced, the telcos can better plan their budget and their strategies moving forward.
 
Industry regulator the Malaysia Communications and Multimedia Commission (MCMC) had announced on Feb 1 that the 900MHz and 1800MHz spectra would be assigned for a fee to Celcom, Digi, Maxis and U Mobile for a 15-year period.
 
It would not have been an easy process for the Government to determine these fees, the industry source told Digital News Asia (DNA).
 
Currently, it is understood that telcos are paying the Government spectrum assignment fees based on two variables: The first is a fixed annual fee, while the second is based on how many towers or sites the telcos own.
 
“Then, multiply that by the amount of spectrum the telcos own,” said the source.
 
“So currently, depending on the spectrum, the telcos are paying based on two formulas.
 
“First, it involves paying a higher annual fixed fee, but paying less in terms of the ‘per tower/ site’ fees. Second, it involves paying a lower annual fixed fee, but paying more in terms of the ‘per tower/ site’ /site fees,” said this source.
 
Another industry source, who also declined to be named, said that the total amount to be paid to the Government as a spectrum assignment fee would be a significant chunk of the telco’s revenue.
 
“As each telco has a different number of sites and towers, and in some cases, different spectrum allocations, the sum to be paid to the Government would really vary – but I think it would be in the range of 4-8% of revenue,” said this source.
 
While the sum may be significant, it is also understood that the Government will consider all aspects of the issue before announcing the fees.
 
Putting a high price tag on spectrum may help the Government increase its income, but it may hurt the telcos badly. If the telcos choose to pass on the cost to the consumers, it will be the consumers who will ultimately suffer.
 
However, pricing it too low may also result in an opportunity cost for the Government.
 
The 1800MHz spectrum allocation will kick in by Jan 1 2017, and the 900MHz will be implemented by July next year.
 
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