KEY POINTS:
New Zealanders may take for granted their mobile phones, but they are thinner on the ground in the Pacific Islands - a situation one Irish company is investing hundreds of millions of dollars to change.
Digicel, whose Caribbean business has invested US$1.5 billion ($1.9 billion) in that region,
kicked off its services in the Pacific in August 2006 with the purchase of Telecom Samoa from Telecom New Zealand.
In Samoa, the price of calls has dropped by over 50 per cent, and Blackberry, roaming and other services available in more developed markets have been introduced.
Now, Digicel building a US$500 million mobile network in rugged Papua New Guinea, becoming the country's largest non-mining investor, despite threats from the government over its operating licence.
With network provider Ericsson, Digicel has built over 200 sites reaching nearly 80 per cent of the population, and is aiming for 90 per cent in coming months. It has dropped the price of making a call by over 60 per cent, said Digicel Pacific chief executive Vanessa Slowey.
Government-owned incumbent Telikom had focused on the main centres, or only about 30 per cent of population.
"Villages in remote areas in Papua New Guinea have never, ever had telecommunications, have never had a landline, never had a phone line, and all of a sudden they have it, and they can afford it which has really, really changed people's lives," Ms Slowey said.
She gives examples of people now able to ring for medical help where previously they could not, or a fisherman fishing to order as restaurants can contact him on his boat.
Industry analyst Phil Harpur of Buddecom said that in Samoa, Digicel had 55,000 of the 70,000 customers by July 2007. In PNG, it had 3500 of the 240,000 subscribers by July, soon after it launched, he said.
Annual market growth was 130 per cent and 151 per cent respectively, he said.
Digicel does not release subscriber numbers or financial data as it is a private company. It is owned by Irish entrepreneur Denis O'Brien, a key Independent News & Media shareholder, who founded Irish telecoms company Esat Telecom against an incumbent state-owned operator.
He later sold Esat for US$2.9 billion and established Digicel in the Caribbean, repeating the successful "challenger" model where it now has 5.7 million customers and 3500 employees.
In PNG, the terrain has not been the only challenge, with the government reversing its early welcome to Digicel, citing changes to its telecommunications policy and the importance of government control.
Digicel had to gain a court injunction to prevent government moves to close it down, and Telikom has reportedly refused to connect its landline and mobile phone services to Digicel's.
"We face challenges in Papua New Guinea in relation to the proposed changes to the ICT policy, but for us it's business as usual," Ms Slowey said.
The PNG government has admitted that the growing mobile market accounted for 0.7 per cent per cent of PNG's economic growth. Digicel's entry had also prompted Telikom to improve its services and prices, and expand its network, Ms Slowey said.
Good communications have been proven to improve a country's economy, as it became easier and cheaper to do business. While intent on turning a profit, Digicel also wanted to contribute to economies in the Pacific, where it hired mainly locals.
"When you improve the economic development of a country, more and more people can afford to come on your network," she said.
"We are very happy with where we're at at the moment in our investment and the return that we've got so far. It's going according to plan."
Digicel has bought Tonga's royal family-owned TonFon, and was working with the governments of Fiji, Vanuatu and other countries.
Should Digicel be successful in getting a licence for Fiji, it would commit around US$130m to build a network.
Fiji has only recently deregulated its market, and Digicel has been trying to gain access since July, Mr Harpur said. He expected it to enter the market by mid-2008.
"I'd say the biggest opportunity would be Fiji by far, they're the biggest island, they're pretty well developed," he said
While a lot of people were poor, there were niche opportunities throughout the islands, particularly where there was a monopoly.
While coverage was the key issue in PNG, enabling people to deposit money via mobile phone was more important in Samoa, where much of the population lives elsewhere and sends money back home.
However, Pan-Pacific coverage was patchy, reflecting differing standards of networks in region.
"Our aim is to build a pan-Pacific network where you'd have seamless roaming, one number no matter where you go, and affordable," Ms Slowey said.
- NZPA
