PNG's telecoms firms compete to deliver television content

The battle for dominance over the telecommunications sector between state-owned Telikom Papua New Guinea and private operator Digicel is extending into the media space, with the two operators expanding their offering into the free-to-air television market. While Telikom’s recent acquisition of commercial television station EMTV and Digicel’s launch of TVWAN appear to be tangential moves, the strategic motivations are mainly convergence driven. Each player appears set on winning the race to have PNG consumers access all their content across multiple devices via a single subscription with a single provider.

Consumer Choice

“The objective is to have a multi-platform presence, and offer apps and free-to-air services on all types of devices, giving customers the choice to access content on whatever platform they prefer,” Bhanu Sud, the CEO of EMTV, told OBG.

According to Michael Donnelly, CEO of Telikom PNG, attracting customers all rests on mobile offerings. “At the end of the day, any telecommunication business starts and ends with mobile services, a segment that is growing at about 15% per annum in PNG, and being a successful operator inevitably means getting a slice of that,” Donnelly told OBG. “We believe that it is possible to win as much as 20% of the market share just by providing an alternative choice to consumers without having to really compete on anything else, as long as the network is reliable.”

In February 2015, it was announced that state-owned Telikom had acquired EMTV’s parent company, Media Niugini, from Fiji Television (Fiji TV), which is listed on the South Pacific Stock Exchange, for a total of PGK27m ($10.2m). When the news first launched that Fiji TV was looking to divest from the company, it was rumoured that Digicel would be acquiring the subsidiary. However, in the end, a deal was made directly with Telikom and the sale was not put out for public tender, fuelling speculation that Irish-owned Digicel and Fiji TV withdrew from a deal due to concerns the government would crack down on foreign ownership in media.

Acquisition Path

Telikom will be absorbing EMTV into its growing portfolio of media and ICT subsidiaries. Two years ago it acquired FM100, the country’s largest radio station, and in 2014 it purchased local internet and data company Datec from Hong Kong-based Swire Group. According to Sud, part of the rationale behind Telikom’s acquisitions is to bolster its competencies in the retail arena following the divestment of its wholesale communication assets to PNG DataCo (see analysis), as the company has historically lacked a private sector mindset and execution capability.

More so, however, the firm is seeking to leverage the synergies and complementarities afforded by the new subsidiaries as it aspires to make a foray into the “triple play” domain. “Telikom has underutilised bandwidth and we [EMTV] now come in as their local production and content partner, while Datec is their gateway customer and provides a whole suite of ICT solutions,” Sud told OBG. Digicel, for its part, is not interested in going down the acquisition path, having embarked on a buying spree of a number of cable and free-to-air companies throughout the Caribbean, where the group has a large market presence.

Thus far, the company is nonetheless well positioned to leverage its global resources, technology and multiple platform experience to push content. In late 2014 it launched TVWAN, PNG’s first digital free-to-air television service. To access TVWAN, a consumer must first purchase a Digicel Play Box for PGK169 ($64), which comes with three free channels, while an additional 25 or so channels are made available in exchange for a pre- or post subscription. According to Sud, digital television is not a threat to analogue in PNG due to constrained spending power. “Over the next 20 years, I do not envision more than 50,000 decoders being sold. And the only way for advertisers to reach the mass market is through free-to-air radio and TV,” he said.

“The government should simplify the existing structure within its own umbrella, in addition to attracting new players into the market,” Donnelly told OBG.