No drop in mobile internet prices in PNG

There is a lot of news in the Papua New Guinea (PNG) telecom sector, with the Digicel purchase approaching, the possibility of a new company coming in, the Telikom PNG cut and more. But there is still no reduction in mobile Internet prices.

We started our price-watching research after the official launch of Coral-C Cable and when the final sections of Komol Cable were put in place. Given all the statements, promises, and predictions made at that time, we expected to generate charts with downtrend lines and difficult analytical work expected. But the task was very simple.

We check the data rates displayed through the smartphone listings every Monday and every time there is no change. From our last update in March 2021 until the end of March 2022, there has been no price increase or decrease. We focus on mobile internet data pricing because PNG’s fixed broadband connection lags behind other Pacific countries and other regions of the world. Shows have been consistent since the start of 2020: you can see all of our updates.

You may be wondering if this parity is due to appropriate market pricing. However, Papua New Guinea ranks very poorly in affordability compared to other countries.

You might be forgiven for thinking our research isn’t very interesting. We cannot reproduce the graphs because they will only show horizontal lines indicating the fixed costs of internet data over time. You might want to forgive the politicians and others who expected lower prices when they spoke at the time of the Coral Sea cable launch two years ago. But such predictions are still being implemented. Internet wholesaler Datko’s president, Paul Comboy, predicted a 50% drop in retail prices by the end of 2022 when he spoke in September of last year. We will continue to monitor prices to determine whether or not such a forecast will occur.

It is worth noting that Compoy is not in a position to influence retail prices. He chairs DataCo, which sets wholesale internet prices, based on guidelines set forth by the regulator, NICTA. So, although Mr. Comboy said retail prices would drop, he couldn’t offer such a guarantee. DataCo sells Internet bandwidth to mobile carriers and ISPs at wholesale prices, and then those companies sell Internet to consumers at retail prices. The lack of movement in retail prices may be due to the lack of competition in the mobile retail market in Papua New Guinea, where Digicel holds more than 90% of the market share.

In the meantime, there are other events in the telecommunications sector in Papua New Guinea that are noteworthy.

Australian telecoms operator Telstra will buy Digicel’s Pacific arm. That is, Digicel operations in six countries of the Pacific Ocean: Papua New Guinea, Fiji, Nauru, Samoa, Tonga and Vanuatu. But she won’t do it alone. The Australian Government will be of great help. In fact, Australia would lose most of the money, even though Telstra would end up owning all of Digicel’s Pacific operations. The deal received mixed reactions: from a welcome suspension of the decision to calls for its annulment. The Papua New Guinea Independent Consumer and Competition Commission (ICCC) has given the green light to purchase Telstra for Digicel’s Papua New Guinea operations, and the regulator has also given approval.

The main driver of this transaction is the significant debt burden of the parent company, Digicel Group.

Despite having a lot of market share and being profitable in Papua New Guinea and other Pacific countries, the company generally took on a significant debt load, which led to it accepting to sell a portion of its operations. It is not yet clear whether this business deal will lead to any tangible improvements to Digicel’s service in Papua New Guinea and the other Pacific countries in which it operates.

Meanwhile, Papua New Guinea’s parliament recently passed a tax – an alternative to the tax originally included in the November budget – that will apply to companies with a market share of more than 40% in the banking and telecoms sectors. The tax will be applied to BSP and Digicel. The BSP will be required to pay 190 million Swedish kronor annually, with the first payment due on September 30, 2022. The first payment on Digicel is 350 million kwacha, due just one week after the bill is passed in Parliament. The company did not pay on time, and its executives have reportedly traveled out of the country fearing possible prison sentences for non-compliance.

Amalgamated Telecom Holdings (ATH), a public company listed on the South Pacific Stock Exchange in Fiji, has received funding from the Asian Development Bank to establish a new mobile phone network in Papua New Guinea. While it was supposed to start offering its services last year, such as Vodafone or Digitec, it has not yet done so. It will add Papua New Guinea’s offer to its mobile networks in American Samoa, the Cook Islands, Fiji, Kiribati, Samoa and Vanuatu.

In September 2021, there was an outage for Telikom PNG in several parts of the country. Customers all over PNG have reported internet outages and the inability to make voice calls. At the time, the telecommunications company admitted that voice calls had been cut off for more than half a day in the capital, Port Moresby. Early this year, disgruntled villagers toppled a major power cable in Chimbo County, causing power and internet outages in much of the highland area.

In the meantime, the merger of Telikom PNG and bmobile continues. Although previous completion dates have passed, the merger is nearing completion. The two companies continue to sell their products separately, although Telikom’s “Rait Kads” can now be used to add credit to bmobile devices and make bmobile “Top Kads” on Telikom devices. The ICCC approved the merger in 2018. In addition, the government is considering the partial privatization of Telikom PNG, announcing the potential benefit of two large pension funds.

Although there are many events in the telecom sector in Papua New Guinea, the main thing that consumers want is reliable and affordable services. Over the past two years, despite assurances that internet prices will drop, smartphone users have not experienced any actual changes in mobile internet data rates. We’ll be interested to check if the developments discussed here – the sale of Digicel, the entry of ATH and the integration of Telikom PNG/bmobile – have any impact on pricing.

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This research was supported by the Pacific Research ProgramFunded by the Ministry of Foreign Affairs and Trade. The opinions represent the opinions of the authors only.