11 Apr 2017
by Kevin McQuillan
IT analysts and industry insiders tell Business Advantage PNG that the Papua New Guinea Government’s decision to merge bmobile and PNG DataCo under a Telikom PNG renamed Kumul Telikom is likely to increase competition and innovation. But the move will not be without challenges.
The merger of bmobile and DataCo with Telikom PNG, outlined in our interview with Kumul Telikom Chairman Mahesh Patel last week, will realise cost savings and harness the synergies among the three telcos, according to Public Enterprises and State Investments Minister Charles Abel.
Local industry insiders appear generally optimistic about the move, with some caveats.
Independent, Port Moresby-based IT specialist Russell Woruba, of Taragai Advisory, believes the restructure will reduce prices, and observes telcos now need to provide attractive bundled services in order to be competitive.
Carriers must offer enterprises and customers not only voice and data, but media content, ICT services, such as cloud options, as well as professional services, he tells Business Advantage PNG.
He notes, however, that to modernise Telikom to meet the current technological climate it may be necessary to involve outside partners who have the skill set and capital.
He also observes that Digicel PNG not only has market share but undisputed market power.
‘By consolidating its assets, Telikom, DataCo and bmobile can compete effectively and create synergies for operational efficiency.’
Masalai Communications’ IT specialist, Emmanuel Narokobi, sounds a note of caution about the restructure.
‘There is a huge cultural shift that needs to take place internally within all the organisations,’ he told Business Advantage PNG.
‘Personally, from our work with them we have tried to push shared services across the various companies but they still do not recognise the strategic benefits of such exercises.’
The merger is supported by a recent report issued by Singapore-based BMI Research, a subsidiary of the global ratings agency Fitch.
‘The transferring of the country’s main fixed-line and gateway assets into one entity, DataCo—which will provide backbone services and international connectivity to operators—will be positive for the market,’ says to the report’s author, Telecommunications Analyst Vanessa d’Alancon.
After DataCo’s plans to upgrade and run the National Transmission Network are completed, expected this year, she says internet service providers (ISPs) and businesses in Papua New Guinea will have access to wholesale capacity.
This will provide a boost to bandwidth and encourage market competition. That competition, she says, should reduce prices over the medium-term for consumers.
More competition for Digicel?
‘Telikom has already begun rolling out 4G at discounted rates in 2017 to encourage take-up and will be in a stronger position to compete with Digicel,’ says d’Alancon.
She warns, however, that it will be difficult for Telikom to take market share from Digicel given that operator’s strong presence in the mobile market. Digicel has been successful in the market since 2007 and has brought mobile penetration in PNG from 1.6 per cent in 2006 to around 45.5 per cent in 2016.
That said, there are still many areas where internet services are unavailable and most rural areas only have 2G services, providing significant growth opportunities.
Digicel’s CEO, Brett Goschen, told Business Advantage PNG that Digicel fully supports an environment where all operators have access to all forms of wholesale transmission capacity.
‘We believe it is fundamental to growing and improving a competitive, open market: prices decrease, service offerings increase and the consumer benefits tremendously.
‘It is clear that the Government’s original communication model involving the transfer of transmission assets to DataCo would go some way toward achieving that.’
That said, Goschen says, however, he is not convinced the new structure will achieve the original intentions of government, namely ‘to create a competitive, open communication industry that augurs growth and value, whilst encouraging innovation’. From the limited public information provided, he noted the new merger does not appear to promote competitive outcomes to the benefit of the consumer, such as reducing the cost of accessibility.
By: Jonny Andrews
Telecommunications is the ‘Heart-beat’ of every thriving economy!
How does one disrupt and conquer a nation? They simply break down the communication between all important Government utilities and department. Put them into a state of confusion and slowly conquer and take control.
The advised Papua New Guinea has been getting in the past of ensuring competition and to separate the Telecommunication entity has been flawed! It has resulted in the State communications entity competing against itself and ensuring that the real competitor succeeds!
The birth of Kumul Telikom Holdings is the realization that we have lost the plot and the need to get back on track is imminent! Kumul Telikom Holdings is the ‘Stepping Stone’ on improving the Telecommunication system in the country.
It provides for a SINGLE Board that ensures the DataCo, BMobile and Telikom Management works effectively, do no compete against each other and provides a roadmap that actually provides greater benefit to the country.
Well done PNG Government!
Consolidation of SOEs right move: Barker
March 6, 2017The NationalMain Stories
Article Views: 169
The recent consolidation of telecommunication State-owned enterprises under Kumul Telikom Holdings “is the right way forward”, according to Institute of National Affairs executive director Paul Barker.
Barker, pictured, told The National that this arrangement would be ideal if complemented with effective management that resulted in enhanced competition in the sector for the benefit of businesses and rural areas.
“Consolidation of the domestic network and linking the key gaps, notably the Northern network with the Hides-Port Moresby link, while rationalising the multitude of State-owned entities, is the right way forward, so long as the best professional board and capable, innovative but prudent management is in place,” he said.
“Operations also be accountable and transparent.
“Real rather than superficial competition is needed, but it’s not logical for that competition to be between ill-resourced State-owned entities but between a stronger, single telecommunications State-owned entity and the other players.
“Consideration of selling off or part sale of the State-owned entity may be considered to increase capitalisation and capacity but the State retains an important role in this space as regulator, encouraging and requiring competition, and ensuring priority services reach the wider communities of PNG, as well as enabling businesses across the country to function, including in rural areas.”
Barker highlighted the need to upgrade Government-owned telecommunication infrastructure with possible adjustments to increase bandwidth from submarine cables.
MINISTER ABEL CLARIFIES THE KUMUL CONSOLIDATION AGENDA
Wednesday February 22, 2017 –Minister for National Planning, and Acting Minister for Public Enterprises and State Investments Hon. Charles Abel today called a media conference to clarify the Government’s main policy priorities through the Kumul Consolidation Agenda.
Minister Abel stated:
* At the outset, our focus should be on ensuring that all relevant boards and MDs/CEOs of the SOEs are in place and addressing all operational issues;
* The government’s overarching objective is to progress the social and economic well-being of the citizens of Papua New Guinea;
* This includes promoting an efficient enabling environment (policies, regulations and legislations) for private sector as the primary generator of wealth and job creation to flourish;
* Government generally only intervenes in the private sector as an active participant when private capital or entities will not and the particular service is vital or strategic;
* The Kumul Consolidation Agenda is intended to improve synergy, coordination and efficiency to the National Government’s participation in commercial activities;
* This includes the aggregating of related Government companies in different sectors such as Telecommunication, energy, agriculture, etc;
* The Department of Public Enterprises is to provide policy development and oversight in concert with the Minister and Cabinet. It is not to get involved in project development. Any such projects are to be handed over to the relevant subsidiary companies or ceased;
* KCH is to oversee the implementation of government policy through the respective subsidiary companies including the most appropriate corporate structuring in relation to the non-mining & petroleum related majority owned government companies;
* This government policy includes capital structuring to involve private capital and management as much as possible;
* KCH should cease developing numerous business projects and only get involved in project development for large scale strategic capital projects on behalf of the sector specific subsidiaries;
* All government companies should generate an adequate return of capital; and
* All government companies should be restructured in order to free up resources and introduce efficiency into the economy unless there is a particular strategic interest or private capital cannot be attracted.
In closing Minister Abel said that KCH needs to regroup and refocus on the job ahead and he was confident that it has a solid foundation of sound corporate governance that would expose and address weaknesses, and identify opportunities if and when they arose.
“I have assumed the role of caretaker Minister of this important Ministry with only two months before the National Elections.”
“In that short period of time I intend to create focus and clarity, and highlight the synergy between National Planning and the three entities – Kumul Consolidated Holdings, Kumul Minerals and Kumul Petroleum.”
By: Andrew Arthur
The Agriculture Sector is about to get a Major Shakeup!
As the campaigning of forming the next Government heats up. Each Political party would want to be seen as the Government for the people and wants to connect to the people. Major policy pushed would be a returned to the Agriculture Sector …
First to fire their Policy is Pangu Party with a funding of K2billion promised for Agriculture! K1 billion to be spent on Coffee and Cocoa as they believe would earn more. The other K1 billion is to be spread across other agriculture sectors.
The reality is…according to FAO, coffee is listed number 22 of the most important and high earning crop and cocoa is not listed in the top 52 at all!
Pangu would be guilty of making the same mistake they did in the early 1980’s………..
What this country needs is to invest into the right product…..look at the list attached, pick the Top 30 and invest into that according to priority.
Food Security is what is Needed the Most! Invest into Food Security as oppose to investing into Coffee and Cocoa!
2. Cattle Farming
3. Poultry Farming
5. Tomatoes, beans, onions etc…
This is where the people in Papua New Guinea want us to invest in….this is what put food on the table
Invest in Food Security!
Pangu Pati will invest into AGRICULTURE when in Government.
Today PNG’s Economy depends on 80% Non-renewal resources & 20% Agriculture export earnings, it was the other way around when we took independence in 1975.
Pangu Pati plans to invest at least K2b into agriculture with a billion directory into Coffee & Cocoa expansion and extension programs.
Coffee to become MINISTRY of COFFEE while cocoa to be the same as both are currently earning K500m into our economy from export earnings.
The investment into the two leading cash crops will see a 15 to 20 years timeline to increase production to earn over K2b plus into our economy.
Expansion and extension programs will see an annual investment K200m each into coffee and cocoa programs.
Agricuiture Ministry will be the leading ministry once again under Pangu Pati with coffee and cocoa to independently branch out into ministries of their own.
The rural population and business groups will participate more into agricuiture to feed PNG the world.
Agricuiture is sustainable and safe investment that PNG must quickly invest into to reduce our reliance on non-renewals.
The National Pg 7 07/02/17
By: Adrian Potter
If you’re old enough to remember business communications via telex, then you’ll understand just how important connectivity is to modern trade and the resulting economic development which in turn brings about significant improvements in health care, education and raises the general standard of living.
It was the 1980s in PNG and I remember the arrival of our shiny new fax machine. It revolutionized the way we communicated. We could draw pictures to illustrate problems and instantly send these to the head office in Australia or the USA. We could place orders for supplies without standing in front of the telex, slowly typing messages that came out on delicate paper punch tape before being run through the machine again and hopefully not breaking mid stream. The fax machine improved our productivity and resulted in measurable improvements in our bottom line.
Fast forward almost 30 years, could you imagine running your business today without email, prevented from marketing your products on social media or not being able to look up manuals and parts catalogs. How could make it through lunch without knowing who was trying to contact you or who had written a review about your latest and greatest product or service, booking your return taxi ride to the office and all from the palm of your hand on your 3G or 4G smart phone. If all of a sudden you couldn’t do these things, your business would grind to a halt wouldn’t it? Well this is the every day experience that many hundreds of thousands of people throughout the Pacific face each and every day and in 2015 no less.
In Port Moresby, Honiara, Port Vila, Suva, Funafuti, Tarawa, Pago Pago and many more Pacific Island cities there’s a mobile communications revolution underway. If you’ve traveled through the islands recently you’ll agree that there’s an undeniable communications revolution underway. Some of the luckiest cities have undersea fiber cables, some have new ultra fast MEO satcom links. However you don’t have to venture too far from town to discover old G.703 E1 microwave links, connecting 2G phone sites. 2G banking and other text based apps are incredibly popular. These old networks will, or are already being crushed by the demand for data throughout the Pacific and not just in the most populace towns and cities but regional areas too. Data and communications demands will increase at an exponential rate in the coming years.
It’s a little old, November 2012 in fact, but I encourage you to take a look at the Lowy Institute for International Policy’s report titled; “Digital Islands: How the Pacific’s ICT Revolution is Transforming the Region”. It can be found here; http://www.lowyinstitute.org/files/cave_digital_islands_web.pdf. I find it an extremely interesting read. Just one of the many profound quotes; “What makes the ICT revolution in the Pacific particularly transformative is its potential to address the region’s demographic, geographic and economic challenges”.
I share the hopes and dreams of the Pacific Islands political and business leadership, that the digital mobile broadband revolution will soon enrich the lives of the Pacific people. Connectivity will bring about political, social, educational, health care and economic reforms that were only dreamt about in recent times.
I’ve recently written of my amazement at the technical and business achievements of O3B. A satellite based fiber replacement in the sky, which has either delayed or negated the need for Pacific Island nations to use their sovereign wealth funds to invest in expensive under sea fiber cables. This MEO system has its place, its pros and its cons. However another transformative technology is on the near horizon for the Pacific, one that will help bridge the digital divide.
Like the long overdue, High Throughput (HTS) Ka Band satellites now being constructed and soon to be launch by Australia’s National Broadband Network Co. a new provider will soon be over head providing the same NBN like speeds and service to the Pacific. Kacific will bring the next wave of affordable broadband to homes, villages and businesses throughout the Pacific Islands. In addition large parts of under served regional and remote parts of Asia, like Indonesia’s far flung Islands, which are not so different from the South Pacific Islands, these will also benefit from Kacific’s new satellite. Not to mention parts of NZ which will also soon have an ultra fast and affordable Ka Band HTS satellite service via Kacific.
With powerful and focused Ka Band spot beams across the vast distance of the Pacific Ocean, Kacific will deliver broadband speeds at never before seen pricing, in places you would never have suspected and all by using quite inexpensive end user terminal equipment. The company’s web site says that the potential market for their new satellite is in excess of 40 million people. A market they’ll clearly lead and dominate in the very near future given their innovative approach to the problem and regional uniqueness.
It’s worth taking a look at their web site; http://kacific.com/.
Just look at the success of companies like Digicell who are investing in the Pacific’s digital future and reaping the financial rewards for doing so. When Kacific eventually lists I’d say take a punt, this is something that will not only make business sense for your investment portfolio, but you’ll be helping the people of the Pacific Islands into a new digital future of health, economic freedom, global participation and happiness.
The greatest investment experts in America have all rallied behind U.S President elect Donald Trump…….their advise is he can make American great again…..and that is to invest more in Infrastructure, Industries and Technology…..
What is Papua New Guinea waiting for? This advise is FREE!
President Trump, You Can Make America’s Economy Great Again. Here’s How
By: Richard Duncan
I have just uploaded a Macro Watch video in the form of a presentation to President-elect Trump. I believe it is the most important video I have ever made. Here’s how it begins:
By: Ludwig Aur Aba
Asia Pacific Economic Cooperation (APEC) is a very important international organization and PNG hosting APEC meeting will bring together very important leaders of superpower countries like USA, Russia, China, Brazil, Australia, Indonesia, Japan and others. There will also be other observer countries as well. PNG was privileged to have been awarded the hosting rights in the last meeting, mainly because of its status as one of the fastest growing economies in the Pacific and the APEC leaders at that time were impressed on the performance of PNG economy, hence the nomination and selection. It was indeed a privilege for PNG in the eyes of the world to have been selected ahead of other countries, which were also nominated.
A good number of people have raised concerns about the benefits of hosting the APEC meeting in 2018, at a back of a suppressed economy and dilapidated state institutions and infrastructure. Several responses were provided but it does not give detailed information about how the country is going to benefit from such an important international event. At the outset, it is quite understandable why people are unhappy about hosting such an international event, when the country has cash flow problems, limited employment opportunity, dilapidated infrastructure, break-down of state institutions, poor social and health indicators. They are questioning why spending K120 million (could be more) on the event, when the economy is in bad shape.
It is worthwhile, a detailed explanation of the pros and cons of hosting such an important event is made to every concerned citizen so they are aware of the costs and benefits.
1. Raise profile of Port Moresby and Papua New Guinea
Raising the profile of our city can lead to lasting economic benefits, not only for POM but PNG as well. For example, cities which hosted the Olympics and other international events have seen a persistent increase in recognition and tourism. Like other international meetings, hosting the APEC raises a country’s profile, which are important in generating new economic benefits and business investments since the day PNG was selected to host the APEC. The importance of this is that it can change the views of the world on Port Moresby, and PNG, especially when POM was ranked as one of the most unlivable cities in the world and PNG has the most corrupt country. There are other aspects of Port Moresby and PNG the world does not see, let’s work together and give them these. Port Moresby is always in the front pages for the wrong reasons, PNG should capitalize on this event to get united and show the world that PNG is different from the rubbish that are published in the media. If there is going to be any chance to increase the profile of Port Moresby and PNG, it is definitely the hosting of APEC.
Why is Port Moresby given too much attention and not other centers? The first answer is Port Moresby is the capital city of PNG and as such, it must be treated as a capital city. You look at Sydney, Tokyo, London, New York, their governments and the private spend lots of resources to bring to where they are now. The country is changing and we must change and accept new developments. Most of these infrastructures have created thousands of jobs for our people. These infrastructures will still be here for our future generations to use. In my opinion, we must give Port Moresby the treatment it deserves to be our capital city, which all of us can be proud of, and our visitors can enjoy.
2. Long term Trade, Investment and Jobs
A significant benefit Port Moresby and PNG benefited is the long-term investment, which comes from preparing for hosting APEC. The preparation did not start yesterday, it started when PNG was selected as the host country for APEC 2018. The POM and PNG will have a legacy of improved infrastructure including venues that should address some of our daily traffic worries. Unlike, other investments, infrastructure is very expensive to build and people should accept this fact. POM should invest heavily in infrastructure and public transport to cater for the influx of not only our visitors but our increased population. This will leave a legacy for residents of POM, they will benefit from improved public transport. Any new investment bring with it jobs, and this may proof beneficial for PNG because the several years of planning and investment will help create jobs and can revive POM and can boost economic output.
Apart from the investments infrastructure and public transport, leaders of major business corporations will be here as well. They will be looking for opportunity to invest their dollars. They may strike trade deals with PNG-based corporations or resources owners. New Business deals could be struck and the employment benefits will be immense. In the long run, such deals will continue to provide employment and tax benefits to the country. Countries may also sign trade treaties or other areas of cooperation that may benefit PNG as well.
Some of the short-term benefits of hosting such events are the logistical and transportation services, which will also benefit from hosting such events. The hotels and catering services will serve our guests (in terms of bed, food, drinks etc). The security services will be increased. These will be immense. Added to these are the inflows of foreign currency, especially US dollars. Some of the leaders will be here with their spouses and other relatives and would like to spend on something that they will remember. These will benefit cultures. We should showcase our cultures to the world. PNG should be showcasing our cultural diversity, the more than 850 different languages to the world leaders as a promotion to attract more tourists into PNG in the future. East New Britain will also host some of the APEC meetings, they will also benefit from the meetings, including hotels, security, showcasing our cultures and selling artifacts etc.
These long and short term investments and spendings are important given the state of economy, by creating jobs, and can help create economic recovery. The investment has potential for leading to higher growth and higher future tax revenues.
Although hosting such important events are beneficial in economic wise, there are other things which may not be so good. For example;
1. Cost of building the infrastructure
To host an Important Event like this, require huge capital investments, which should be paid for by tax payers, unfortunately. The Costs of building these infrastructures have a tendency of going up and could be much greater than expected. Associated with the cost over-runs are the over inflated contracts, and the involvement of politicians in such contracts. These are the main issues. Politicians should not get the dirty fingers in such big projects. Unfortunately, we are in PNG and cannot avoid that.
2. Short-Term use
The other important thing is that many of facilities built for the APEC can never be fully used again. It will rarely be full outside of the Olympics. This can be mitigated by careful planning.
3. Potential for negative publicity
If things go well, a POM can benefit from positive publicity, but if things go badly, it can cause the opposite.
4. Cost of Security
The budget for the security will be biggest slice of the cake. Like any major events, this APEC should increasingly implement higher levels of security. This is both costly and can restrict freedom of movement of local citizens during the meetings.
4. Borrowing and Increase in Debt
Also, one bad thing about hosting such events is that, it eats into the budget of the host country. With the current difficult economic times PNG is facing, it has no choice but to borrow and fund the activities leading up to the APEC meetings. This may add to the overall Government debt of PNG, which will eventually be paid by the tax payers.
In my view, it is understandable why people complain about the spending by the Government to host the APEC, while other areas are suffering. But developing Port Moresby is not wrong, it is our capital city and we have to develop it. In life, there are always trade-off, we can’t get all we want. We should make some sacrifices, and in the meantime, the sacrifices are being made by the 7.5 million people of PNG to host this very important economic meeting. Let’s make use of every opportunity from this meeting and try and get something out of it to compensate for our sacrifices.
The importance of this is that it can change the views of the world on Port Moresby, and PNG, especially when it is ranked as one of the most unlivable cities and the most corrupt countries in the world. There are other aspects of Port Moresby and PNG the world does not see, let us work together and give them these. Port Moresby is always in the front pages for the wrong reasons, PNG should capitalize on this event to get united and show the world that PNG is different from the rubbish that are published in the media more frequently. If there is going to be any chance to increase the profile of Port Moresby and PNG, it is the hosting of APEC.
Let us not kill the enthusiasm to host such international events. PNG has come of age, though we have problems, they are not unique to PNG. Every country has its own set of problems, it’s not only PNG. President of US, China, Japan, Russia and others will be here. PNG just had this rare opportunity to host them. We should feel privileged to host such very powerful and important leaders on earth.
I hope I make some sense here.
Network deployment costs are high in PNG due to the relatively low subscriber base, the impervious terrain, and the high proportion of the population living in rural areas. As a result, fixed telecom infrastructure is almost inexistent outside urban centres, leaving most of the population unserviced. With fixed teledensity having seen little change over the past two decades, progress in telecommunications has come primarily from mobile networks, where accessibility has expanded from less than 3% population coverage in 2006 to over 80% by early 2016.
This impressive growth was triggered by the start of mobile competition in 2007. When it entered the market, competing mobile operator Digicel brought mobile services to previously unserviced areas and at the same time slashed prices. The result was a substantial increase in mobile penetration – from 1.6% in 2006 to 49% by early 2016. This remains low by international standards, and though there remains considerable room for growth this could be stymied by the latent difficulties within the market, including the high cost of deploying infrastructure, the relatively low income base among potential subscribers, and the geographical dispersal of the population. As a result of these conditions PNG remains one of the least affordable mobile markets in the Pacific.
Despite the opening of the market to competition, internet access is expensive in PNG and far beyond the means of most of the population. Throughout much of the country, internet access is simply unavailable. Mobile coverage into 2016 is extensive, though most rural areas still have only 2G services.
Nevertheless, mobile broadband is proving far more successful than fixed-line broadband, and both Telikom and Digicel are planning to provide LTE services by the end of 2016. The number of mobile broadband users is expected to continue to grow strongly as these operators expand their 3G and LTE networks in the coming years.
To overcome the country’s communication shortcomings, the government is deploying a National Transmission Network, which is expected to boost bandwidth and encourage market competition. It is managed by the state-owned PNG DataCo, which acts as wholesaler.
Given the underdeveloped telecom services, PNG’s telecom market has enormous growth potential. Despite the challenges, the country offers many investment opportunities. An increasing number of Papuans are embracing the digital age, particularly the younger generation, and mobile phones in particular are becoming a more important source of social interaction.
- SIM card registration enforced;
- Regulator issues tender for 3G mobile services;
- Digicel Pacific extends capacity with new O3b Networks deal;
- DataCo inhibited by slow transfer of telecom infrastructure;
- Telikom PNG expecting LTE launch by end-2016;
- PNG’s state-owned incumbent Telikom is being restructured to focus on retail services while its network is transferred to the state-owned company DataCo;
- Telikom PNG reduces retail and wholesale internet charges to stimulate take-up of services;
- PNG’s National Transmission Network has international connectivity via the PPC1 submarine cable landing in Madang, offering additional bandwidth to the APNG-2 cable landing near Port Moresby;
- Submarine cable network ICN2, connecting PNG to Vanuatu, expected to be lit by mid-2016;
- PNG’s telecom regulator, NICTA proposes mandatory sharing of mobile network infrastructure.
Market penetration rates in PNG’s telecoms sector – 2015 (e)
Penetration of telecoms services: Penetration
Fixed-line telephony 1.9%
Fixed internet users 9.4%
Mobile SIM (population) 49%