Telecommunications price falls will continue in Papua New Guinea, say Digicel and Telikom

Corporate and residential telecommunications prices in Papua New Guinea should fall over the next year as infrastructure improves, according to senior representatives of PNG’S two leading telecommunications companies, Telikom PNG and Digicel PNG.

When John Mangos, Chief Executive Officer of Digicel PNG (PNG’S largest provider of mobile services) and Mahesh Patel, Chairman of state-owned Telikom PNG (which has monopoly on fixed-line services in PNG), sat side by side to answer questions at the Papua New Guinea Advantage international investment summit in Port Moresby in September 2013, the high cost of phone and data services in PNG was the big issue on the minds of delegates.

Both men had good news, however: new infrastructure, they said, was delivering lower prices and better services.

‘I think this year alone we’ve spent about K200 million (US$82 million), and the majority of that is on 3G upgrades,’ said Mangos.

‘But if you really look at it, it’s all about data, it’s all about smartphones, tablets, how people remain connected, so that’s really where all the investment’s going.’

Data usage rising

‘When we started rolling out our networks six or seven years ago, the demand really was for voice and SMS services, and we started with low speed data. All we’ve seen from there is just a huge take-up in data usage.

‘So, of the 730-odd sites that we have out there, we’re upgrading 300 of those to 3G cell and also going to be trialling LTE [Long Term Evolution, also called 4G] shortly.

‘Most of the investment is going straight into data and there has also been a doubling of the voice capacity over the last couple of months as well.'

Telikom stabilising infrastructure

Mahesh Patel said Telikom PNG’S focus is currently on improving an old infrastructure.

‘The fixed-line infrastructure has really deteriorated while revenues are going down. So, it’s a bit of a dilemma whether we spend and how much do we spend on that. The first priority will be to stabilise the infrastructure. ‘Second, we’ll be looking at going into fixed-line broadband. ‘With the major centres, we’re looking at 4G, so the plan has started. By November 2014, we’ll be up and running.’

Pricing comparable to Australia

Both said they wanted PNG pricing to be similar or lower than that in Australia.

‘If you go back to say two, two-and-a-half years when there wasn’t any 3G across the operators, Telikom and Bemobile, data was about two kina (US$0.82) per megabyte,’ said Mangos.

‘Fast forward to now—it’s 10 toea (US$0.04) per megabyte. So, there’s actually a mobile parity and it’s fallen significantly in the last two-and-a-half years. I think we’re seeing in the corporate end and down at the SME (small and medium-sized business) end, you’re seeing prices actually lower than that again.'

Patel agreed PNG pricing is getting close to international prices.

‘The ultimate goal really is just to concentrate on keep dropping prices, as affordability is an issue in PNG’S remote areas. Ideally, we’d like to be cheaper than Australia really.'

Limited scope for new players

Both Patel and Mangos agreed there is limited scope for a fourth player, the re-capitalised Bemobile being PNG’S third telco (see box above).

‘PNG is not even four per cent of what the Australian market is,’ said Patel. ‘So it’s not a big market.

‘From my perspective, for further competition, if we had a couple of telcos in mobile, a couple in fixed line, that should really bring the prices down and give the service to the people.’

Mangos predicted the high cost of providing access would be a hindrance to any new national telco, but the entrants would be voice, ISP and data providers.

‘For the whole industry to develop, you need to actually get all those value-added services—isps, call centres, data centres—on top of what we’ve already done,’ Mangos said.

‘It’s not about connecting the [regional] areas any more, it’s about: once a customer is connected, what do they require on top of that?’