Mobile phone competition in Papua New Guinea and Solomon Islands is about to get tougher, after a deal which will see about K550 million (US$250m) in new funding for PNG’s second carrier, Bemobile, which will see it relaunched as Vodafone Bemobile.

Fiji National Provident Fund CEO Aisake Taito, left, talks to the media after the signing of the Bemobile contract. With him are the FNPF Chairman Ajith Kodagoda and Vodafone Fiji Limited’s CEO Pradeep Lal. Credit: FNPF

The deal was signed in Port Moresby yesterday by PNG Prime Minister, Peter O’Neill, and his Fiji counterpart, Commodore Frank Bainimarama.

It is understood that PNG’s Independent Public Business Corporation (IPBC) will retain a 51% stake in Bemobile under the terms of the deal, with Fiji’s National Provident Fund taking a 40% holding in the operator. Vodafone Fiji has been contracted to manage the company, meaning a Vodafone Bemobile brand will be launched in PNG and Solomon Islands.

Bemobile Chairman Syd Yates

The chairman of Bemobile, Syd Yates, told local media the deal was the culmination of months of hard work ‘and we are pleased that the final outcome will see Bemobile with the capital and the strategic partnerships to enable it to compete and thrive in both PNG and Solomon Islands. This investment will bring much needed competition to this sector in PNG,’ he said.

‘The restructure could provide real competition in the sector and drive down the costs to business,’ the Chairman of the IPBC, Thomas Webster, said at this week’s Australia-PNG Business Forum.

Ernie Gangloff, President, Business Council of Papua New Guinea also welcomed the deal, telling Business Advantage PNG that it should not only enhance customer service but also help to reduce the cost of mobile services.

‘Vodafone have outdone Digicel in Fiji,’ he said. ‘We know their performance capabilities and they’ll have control of operations here. We’re happy there will be a benefit to consumers.’

But Gangloff noted it would ‘take time for them to get up to speed and rehabilitate the network. Vodafone will have a number in mind for the cost of this. The PNG Government will need to meet the costs of its equity share too.’

The deal was endorsed by the O’Neill government a few weeks ago, after negotiations in Australia between representatives of the IPBC, Asian Development Bank, the Papua New Guinea’s two major superannuation funds, FNPF and Vodafone Fiji (in which FNPF is a shareholder).

The Bemobile investment is FNPF’s first major investment outside of Fiji.

‘This investment provides FNPF the opportunity to diversify our investment portfolio. There is good potential for growth given the high economic growth potential in PNG and the Solomon Islands.’ FNPF’s Chief Executive Officer Aisake Taito told Business Advantage PNG. ‘We do not expect that the controlling interest by the PNG Government will be a sovereign risk issue. In fact, the PNG Government’s approach to this investment has been to driven by their desire to ensure that the quality of communication to its people will improve dramatically, which would include the reduction in the cost of communication and ultimately this will lead to improvements of the lives of its people.’

It is not clear if this investment will be start of further investments outside Fiji by the fund:

‘Offshore investment by FNPF is subject to the Reserve Bank of Fiji’s approval. For now, we will focus on ensuring that our investment in BeMobile provides positive returns to our members,’ said Taito.