Papua New Guinea finally has a third telecommunications player, following the launch of Vodafone PNG last week. Talking exclusively to Business Advantage PNG, Vodafone’s Regional CEO Pradeep Lal outlines the telco’s ambitious plans.

The Vodafone brand over APEC Haus in Port Moresby at the network’s launch last week. Credit: Vodafone PNG

After almost two years of COVID-related delays, Vodafone PNG is finally a reality. It has welcomed onboard just over 100,000 subscribers to its new network since its official opening last Thursday.

For Pradeep Lal, Vodafone PNG’s successful launch is the culmination of a journey that started over 20 years ago.

‘I had originally come to PNG back in days as a young graduate to support a local entity, Datec, at that time owned by Steamships,’ he tells Business Advantage PNG.

‘This is ATH’s third attempt to enter PNG’s telecommunications market’

‘I saw so much potential in this country at the time. Therefore, I am most humbled and extremely pleased to be part of this transformational project that will have lasting positive impact on the people of PNG.

‘A well-developed, robust and affordable telecommunications infrastructure is critical to supporting the development of many other industries and sectors.’

Growth potential

Lal thinks that there is immense potential to grow the market in PNG, which is currently estimated at about three million mobile customers in a population of about ten million people.

‘According to GSMA reports, market penetration here is about 37 per cent of the population,’ he notes, citing the ratio of SIM cards to head of population. Internet penetration stands at just 20 per cent.

‘Fiji is at 130 per cent mobile penetration – the same as Australia and New Zealand. Vanuatu and Samoa are at 100 per cent. PNG can very easily reach between 80 to 90 per cent mobile penetration in the next couple of years.’

‘Within 18 months, we aim to have live on-air 1200 sites, covering 90 per cent of PNG’s population.’

In such an expanded market, he believes, there is plenty of room for a third operator to compete effectively and provide the stimulus needed to spur increased competition.

‘To put things in perspective, in New Zealand, for instance, with 4.5 million population, there are three profitable operators who provide competitive propositions and continue to invest to transform the network and customer experience.’ PNG is more twice the population size of NZ.

Experience

Deputy Prime Minister Sam Basil (left), Vodafone PNG Chairperson Kalpana Lal, and Prandeel Lal (right) during the launch of Vodafone PNG. Credit: Vodafone

Vodafone PNG is owned by Singapore-registered ATH International Venture Pte Limited with a few institutional investors, including the Asian Development Bank (ADB) and Amalgamated Telecom Holdings Limited (ATH), which has operations in Fiji, Vanuatu, Samoa, Cook Islands, Kiribati, American Samoa and now PNG.

Vodafone Fiji has the rights to the Vodafone brand in the Pacific through a partnership agreement with Vodafone Sales & Services Limited in the UK and this is used by all Vodafone companies operating across the Pacific markets.

Lal explains that this is ATH’s third attempt to enter PNG’s telecommunications market, after a deal to acquire Telikom PNG fell through in 2012. A subsequent attempt to invest in Bmobile (now merged with Telikom) proved short-lived.

Technology

One of the competitive advantages Vodafone PNG brings is its access to the latest technology.

‘In every market we go, our target is to be the best. We are very determined to provide top quality products and services. All our base stations are 3G/4G+, offering greater speed and capacity,’ says Lal.

Lower prices on products such as handsets and cheaper data are a part of the Vodafone offering at launch. The cheapest 4G smartphone on offer retails for just K89.

‘According to Lal, the launch in PNG represents an investment of just over K3 billion’

‘Along with value packed mobile and data bundles, we also have a comprehensive suite of ICT products aimed at business customers and specifically at various verticals such as agriculture, education, finance and health, to name a few.’

At launch, Vodafone’s network covers about 50 per cent of PNG’s population, covering Port Moresby, Lae, Madang, Mt Hagen and Goroka. Lal says the network rollout will continue beyond the 500 towers in its first phase.

‘Our target is to expand this to 800 sites by Christmas, thereby covering all 22 provinces. Within 18 months, we aim to have live on-air 1200 sites, covering 90 per cent of PNG’s population.’

Investment

According to Lal, the launch in PNG represents an investment of just over K3 billion, 53 per cent of which is being provided by shareholders and 47 per cent financed through borrowings.

The entry into the PNG is also being underpinned by a US$25 million (K87.75 million) ‘cornerstone’ equity investment from the ADB, which conducted its own comprehensive project appraisal and due diligence before investing.

‘This is a mark of confidence in the market, management’s capabilities and positive financial returns from an institutional investor perspective,’ says Lal.

Competition to drive market reform

Tower sharing is a ‘no brainer’, according to Pradeep Lal. Credit: Vodafone PNG

The long-held policy goal for PNG’s telecom sector has been for genuine competition, enabled by the sharing of network infrastructure among all telcos and an ease of movement between companies for consumers.

In contrast to previous network launches, an interconnect agreement is already in place to ensure phone users in PNG are able to call phones on all three mobile networks.

Initially, Vodafone PNG is issuing new mobile phone numbers to its customers. However, Vodafone’s Pradeep Lal believes that number portability will provide customers more choice and help lift overall standards in the market.

‘If your service is below par, then customers have a choice; they will migrate to a new provider but continue to maintain their current number. We strongly support number portability.’

Lal also believes that tower sharing is a ‘no brainer’ and would eventually benefit all players in the market.

‘Competition may look at their towers as a strategic asset and it may be a competitive advantage for them today, but that will very quickly change, as we progress our network expansion program.’ Shared infrastructure is becoming a norm in many markets.

Lal says he is currently in discussion with PNG’s other telcos about tower sharing and other areas of mutual interest. He believes the National Information and Communications Technology Authority (NICTA) could play an important role to help avoid duplication and expand coverage to more rural and remote areas much faster and more economically.

‘For the next batch of towers we are constructing, we are willing to go into new areas if we co-site on towers in existing areas’, says Lal.