ICT industry shake-up continues with mergers and acquisitions

Allcom PNG and mcr PNG have become the latest technology services companies in Papua New Guinea to consolidate, after announcing a merger that will see the enlarged entity realise a number of operational synergies.

Growing demand for information and communications technology (ICT) in Papua New Guinea provided Allcom PNG and mcr PNG with the incentive to merge into one of the country’s largest ICT service providers, Allcom MCR PNG.

The merger follows Telikom PNG’S acquisition of internet service provider (ISP), Datec PNG in early 2014, and Digicel PNG’S purchase of ISP and services company Daltron in late 2013.

It also marks the first involvement by either company in merger and acquisition activity in PNG and, according to Luke Byer, Managing Director of the new entity, it comes at an appropriate time in the development of the country’s ICT industry.

‘Since we have been established in PNG, there has been a shake-up in the industry—there is rationalisation happening.

‘I think our merger was timed to give us a bit more size in the market at this very important time in the evolution of the industry in PNG,’ Byer tells Business Advantage PNG.

Technical service

Allcom PNG and mcr, which have been operating in PNG since 2008 and 2009 respectively, have combined with the aim of delivering a stronger technical service to their clients, which sit in broad range of industry sectors, including resources and government, Byer explains.

He adds that the two companies had a ‘fairly complementary skill set’.

‘We did compete in a number of areas [before the merger] but found overall that it was more of a complementary vision if we merged the two companies together,’ Byer said.

‘Our main area of overlap is in our networking practice, as we are both Cisco (Systems Inc) partners and we both have Cisco engineering expertise.

‘We also saw that as an advantage. At different times, we struggle to provide the level of engineering support required in PNG, given it is a growing market. Now that we have a bigger team of engineers with different skill sets, we have a bigger team to utilise.’

Future opportunities

The merged company, whose clients will include Bank of South Pacific, Interoil Corporation, Airlines PNG and Paradise Foods, will have around 30 staff, predominantly made up of ICT engineers, with focus on development of PNG locals.

Byer was confident of expansion for the new company, saying that while PNG’S economic growth was being driven by the PNG LNG project, there were opportunities for ICT companies in not only oil and gas, but also other sectors.

‘PNG, even before the LNG project, was an emerging market,’ Byer said. ‘Infrastructure may lag behind what we would expect in countries like Australia, but customer expectations are not far behind.

‘It is up to companies like us to come up with innovative ways of providing a customer experience that would also be expected somewhere like Australia.’