Malaysia is planning to launch a second 5G network in January 2024, according to local news report and Reuters. The move is aimed at addressing concerns over pricing and transparency, and to avoid a government-owned single network leading to a national monopoly. However, the success of the 5G network will depend on the effectiveness of its implementation.
For the data center industry, the successful rollout of the new 5G network could further spur the growth of the sector in the country.
Reason for Transition to Edge
“When you have 5G, it allows for faster data transfer, which would help drive the edge data center segment. It will encourage hyperscalers and co-location players to build edge data centers that are closer to where the population is located, akin to the hub and spoke,” said R. Remakantan, COO of Area Real Estate Advisory.
“The edge data centers will be focused on different aspects of data communication such as medical data, telematics for vehicles and industry 4.0-based sensors that collect data from automated production equipment. Many of these data centers will be small enough to be located in offices, shop lots and containers. 5G can be the catalyst for this,” he added.
Malaysia is planning to launch a second 5G network starting next year. According to the report, Malaysia’s state-run agency, Digital Nasional Berhad (DNB), has faced multiple setbacks in rolling out its 5G network since its debut in December 2021. Industry players have expressed concerns over pricing and transparency, and there are fears that a government-owned single network would lead to a national monopoly.
“It’s still early days in terms of knowing how effective the implementation will be, the density and the speed of the new 5G network,” said Remakantan.
A second 5G network is reported to be introduced as early as January 2024 but the communications and digital ministry told Reuters that no decision has been made yet on 5G.
Among Malaysia’s main telco companies are Maxis Berhad, CelcomDigi, U Mobile, Telekom Malaysia and YTL Communications.
Foreign Player Dominance
Remakantan mentioned that the movement into edge is dictated by foreign players in Malaysia but with an additional 5G network being implemented in the country, it could be a catalyst for the local industry players to venture into edge data centers.
“The movement into edge is currently driven by foreign operators. I don’t see the local industry players venturing into edge yet, but it would depend on how well the new 5G network is implemented,” said Remakantan.
“If the implementation is done right, it will enable the environment for edge data center demand in the country,” he said.
Supply and Demand
Demand for improved communications technology and digital infrastructure in Malaysia can be seen through the expected growth of the overall data center sector in the country.
“It’s all to do with demand and supply. If there is a demand for closer proximity access to users, then data centers operators will be encouraged to set up edge data centers.
“There is a possibility that local data centre players could expand into edge but no announcement has been done. The new 5G network could be a catalyst but investment in this area this would only pick up pace once the network is seen as stable, fast and reliable.
“5G networks require high density base stations and repeaters in populated areas and the licensee would have to invest in this. If the density of the network is high enough, then 5G will work well, otherwise it’s as good as 4G,” admitted Remakantan.
The new 5G network is expected to drive the growth of edge data centers and improve the digital infrastructure in the country. However, the success of the 5G network may depend on its implementation. With the expected growth of the data center sector in the country and the new 5G network next year, there will be opportunities for both local and foreign players to venture into edge data centers.
In the past ten years, Malaysia has emerged as one of the most vibrant data center markets in the Asia Pacific (APAC) region, thanks to a surge in cloud adoption and government-supported initiatives, according to a recently released report by Knight Frank.
