Mahesh Patel, Chairman, Telikom PNG: Interview

Interview: Mahesh Patel

How do you see the recent merger impacting the telecommunications market in Papua New Guinea?

MAHESH PATEL: This merger has been four years in the making – bmobile used to be part of Telikom, but when it was taken out the whole portfolio was weakened, allowing our competitor to grow. After much discussion it was decided bmobile, Telikom and DataCo would be consolidated, as to better compete in the market. If the three companies stood alone they would all fail, as none of them can offer a full service to clients.

Looking forward, this merger will absolutely create competition, because it gives the consumer a choice. As it stands, consumers feel that they are at the mercy of monopoly-style pricing. Our services will keep improving as we address technical issues. The 4G network is built and offers huge speed, but we have a bottleneck going out of the country with the undersea cable. Fixing this will open the floodgates for a serious price drop for data. We must, however, be strategic about managing the price and the capacity.

As a competitive, state-owned telecoms company, how do you balance profit and social service?

PATEL: There are disadvantages to being a state-owned entity. For one, we have no say on who sits on our board and are therefore slowed in the decision-making process. The government is trying to work on this and hopefully we will see some progress soon.

Furthermore, unlike private sector competitors we are not die-hard profit driven. Obviously we have to make profits to survive, but we do have a sense of responsibility in regards to delivering service to remote areas. I am very committed to the cause of fully connecting the country at an affordable price. As a state-owned enterprise it is our responsibility.

Naturally, these are two pretty big restraints when put up against a private, purely profit-driven corporation. Technically, the operators are supposed to pay a fee to the National Information and Communications Technology Authority (NICTA) to subsidise remote regions. This, unfortunately, is not happening at the moment. The Universal Access Service (UAS) Scheme, which imposes a 2% levy, is a great way to expand telecoms access. It takes the burden off of any one operator and makes the process of expanding coverage more affordable. In an area with 500 people and a lack of infrastructure, it does not make economic sense to invest PGK1m ($317,000) on a tower. The UAS Scheme would allow NICTA to pay for the cost of the tower, while telecoms companies provide the service, making it essentially a not-for-profit arrangement.

In what ways are you overcoming challenges related to expanding services to rural areas?

PATEL: The biggest challenge is negotiating with land owner groups. We are starting to give the local community a sense of ownership over their tower. Instead of paying land rent we appoint residents of the village to be our resellers, turning the tower into a revenue stream for them. This cuts security costs too. Instead of paying high fees for security guards, the people protect it themselves since it is a source of income.

Lack of power remains a problem. Refuelling gensets in remote areas is expensive, and as a service-oriented enterprise we will continue to deal with these costs. We are also trying to build partnerships with members of parliament (MPs) to subsidise the high cost of expanding to remote areas. The service we can provide to such places – in partnership with MPs and with the use of District Services Improvement Programme funding for development – is far reaching, and includes telecoms, radio and television.

Access to these services would provide electronic education, e-health and many other social services. According to the World Bank, a 10% increase in connectivity means a 2% increase in GDP. The potential is there, it is just a matter of establishing partnerships and rolling out the infrastructure to get it started.