‘We rejected YTL’s six-month free internet service to schools due to hidden costs’ — ministry

(The Edge Markets) – The Ministry of Education rejected YTL Communications Sdn Bhd’s offer for free internet service to schools nationwide for an interim six month period prior to the call of an open tender next year, mainly due to hidden costs of more than RM40 million.

In a media briefing today, Education Ministry Secretary General Datuk Mohd Gazali Abas said the ministry had acknowledged receipt of a letter dated May 31 from the YTL Communications, a 60%-owned unit of YTL Power International Bhd, offering free internet services for a period of six months starting July.

However, after due consideration of several factors, it decided not to award the tender to YTL.

Instead on June 27, the Ministry issued a statement saying it had awarded the six-month contract to Telekom Malaysia, Celcom Axiata and Maxis.

Amongst other reasons, the main reason why it did not select YTL was that the company had stated terms and conditions in their offer, including the request of free electricity and rental of their telecommunications tower, Mohd Ghazali said.

“The Ministry found that it would incur a potential loss of rental revenue totalling RM32.58 million from the telecommunications tower in the six months. These are hidden costs and would not be a free service for the Ministry,” he said.

At the start of the project, Mohd Ghazali said YTL Communications had never paid electricity charges for the telecommunication tower that it installed at the schools and government premises.

“Estimates of these costs involving 2,715 sites total up to more than RM40 million, and are paid for by the Government,” Mohd Ghazali said.

He said YTL should pay for these charges, as it is also using the telecommunication tower for other commercial uses. The Ministry will consider renting the land for use of setting up the telecommunication tower at a commercial rate in the future.

Furthermore, Mohd Ghazali said the Ministry did not want to repeat the weaknesses of repetitive long-term contracts, so as to ensure it gives them the opportunity to try new alternative technologies that might be better for the schools, teachers and students. This would also help the Government save, he added.

“We also found that the quality of access to internet provided was not satisfactory and could not provide the best service to the Government.” Mohd Ghazali said.

He said the internet speed for the first phase (Dec 2011 to June 2016) was at 4mbps, and that the speed for the second phase (July 2016 to June 2019) was not significantly different.

Mohd Ghazali said the Ministry will begin calling for the fresh open tender of internet services to schools in the next few months of which YTL Communications is invited to join. It is slated for implementation beginning January, 2020 for a three-year period.

With regards to an article issued by “Friends of Maszlee Malik” which gave seven reasons why the 1BestariNet project should be terminated, Mohd Ghazali said it is not officially associated with the Ministry nor the Minister.

Background

The 1BestariNet project was awarded to YTL Communications in 2011, after an open tender for a 15-year service contract which is to be implemented and reviewed in phases.

In July last year, the Ministry announced it would be calling for a fresh open tender in early 2019, for the continued provision of internet connectivity to 10,000 schools nationwide. However, it postponed the open tender, citing lack of budget.

YTL’s phase 2 contract was set to expire on July 1. As the open tender had been postponed, the Ministry has a six month interim period without a provider. As such, they called for a meeting with Telekom Malaysia, Celcom Axiata, Maxis and YTL Communications in April, requesting for free service for the six-month period.

The Ministry said it had received responses from these companies, including from YTL Communications.