Vodafone’s K3 billion investment to expand telecommunications market in Papua New Guinea

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Papua New Guinea finally has a third telecommunications player, following the launch of Vodafone PNG last week. Speak exclusively to Business Advantage PNGVodafone regional CEO Pradeep Lal outlines the telecom operator’s ambitious plans.

The Vodafone brand on APEC Haus in Port Moresby during the network launch last week. 1 credit

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

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

“I had come to PNG at the time as a fresh graduate to support a local entity, Datec, at the time owned by Steamships,” he says. Business Advantage PNG.

“This is ATH’s third attempt to enter the PNG telecom market”

“I saw so much potential in this country back then. Therefore, I am very honored and extremely happy to be part of this transformational project that will have a lasting positive impact on the people of PNG.

“A well-developed, robust and affordable telecommunications infrastructure is essential to support the development of many other sectors and industries.”

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Growth potential

Lal believes there is immense potential to grow the market in PNG, which is currently estimated to have around three million mobile customers in a population of around ten million people.

“According to GSMA reports, the market penetration here is around 37% of the population,” he notes, citing the ratio of SIM cards per capita. The Internet penetration rate is only 20%.

“Fiji has a 130% mobile penetration rate, like Australia and New Zealand. Vanuatu and Samoa are 100%. PNG can very easily reach between 80 and 90% mobile penetration in the next two years. »

“Within 18 months, our goal is to have 1,200 sites live, covering 90% of PNG’s population. »

In such a large market, he believes, there is plenty of room for a third operator to compete effectively and provide the necessary stimulus to drive increased competition.

“To put things into perspective, in New Zealand, for example, with 4.5 million people, there are three profitable operators who offer competitive propositions and continue to invest to transform the network and the customer experience. .” PNG is more than twice the size of New Zealand’s population.

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Prandep Lal

Deputy Prime Minister Sam Basil (left), Vodafone PNG Chairman Kalpana Lal and Prandeel Lal (right) at the launch of Vodafone PNG. 1 credit

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

Vodafone Fiji owns the rights to the Vodafone brand in the Pacific through a partnership agreement with Vodafone Sales & Services Limited in the UK, which is used by all Vodafone companies operating in Pacific markets.

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

Technology

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

‘In every market we go to, our goal is to be the best. We are very committed to providing top quality products and services. All of our base stations are 3G/4G+, providing superior speed and capacity,” says Lal.

Lower prices on products such as handsets and cheaper data are part of Vodafone’s offer at launch. The cheapest 4G smartphone on offer sells for just 89K.

‘According to Lal, the PNG launch represents an investment of just over 3 billion K’

“In addition to value-added mobile and data plans, we also offer a full suite of ICT products aimed at business customers and specifically for various verticals such as agriculture, education, finance and healthcare, to to name a few.”

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

“Our goal is to expand it to 800 sites by Christmas, covering all 22 provinces. Within 18 months, our goal is to live stream 1,200 sites, covering 90% of PNG’s population.

Investment

According to Lal, the PNG launch represents an investment of just over K3 billion, of which 53% is provided by shareholders and 47% funded by debt.

Entry into PNG is also backed by a capital investment of $25 million (K87.75 million) from the AfDB, which conducted its own comprehensive project assessment and due diligence before signing. invest.

“This is a mark of confidence in the market, management capabilities and positive financial returns from the perspective of institutional investors,” says Lal.

Competition to Drive Market Reform

Lap sharing is a “no-brainer”, according to Pradeep Lal. 1 credit

The long-standing policy goal of PNG’s telecommunications sector is genuine competition, made possible by the sharing of network infrastructure among all telecommunications operators and ease of movement between companies for consumers.

Unlike previous network launches, an interconnection agreement is already in place to ensure that phone users in PNG can call phones on all three mobile networks.

As a first step, Vodafone PNG issues new mobile phone numbers to its customers. However, Vodafone’s Pradeep Lal believes that number portability will give customers more choice and help raise overall market standards.

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

Lal also thinks that tower sharing is a “no-brainer” and would ultimately benefit all market players.

“Competitors may view their towers as a strategic asset and it may be a competitive advantage for them today, but that will change very quickly as we progress through our network expansion program.” Shared infrastructure is becoming the norm in many markets.

Lal says he is currently in discussions with other telecom operators in PNG about tower sharing and other areas of mutual interest. He believes the National Information and Communications Technology Authority (NICTA) could play an important role in helping to avoid duplication and extend coverage to more rural and remote areas much faster and more cost effectively. .

“For the next batch of towers we build, we are open to entering new areas if we co-locate towers in existing areas,” Lal says.

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