On it grows: Little sign of a slowdown as providers diversify products and services in line with market demand

After a half century of state monopoly control, the telecoms market in Papua New Guinea underwent liberalisation in 2007, resulting in a rapid increase in the sector’s value and contributing an estimated 2.5% to annual GDP growth in 2010.

Largely abandoning the constraints of terrestrial fixed-line telephone networks, the people of PNG have enthusiastically embraced mobile technologies that have revolutionised the economy and domestic consumer behaviour, tapping into its vast and dense population. Now, under continued legislative reform, PNG stands ready to welcome international investment to modernise and expand its telecoms infrastructure.

PROGRESS SO FAR: Subject to limited investment and maintenance since 1955 under the state monopoly of Telikom PNG, the sector ended up with a relatively stagnant market, a situation that was exacerbated by high investment costs, limited access to credit and sharp geographical divisions. In the five years after liberalisation, PNG’s telecoms sector made substantial advances under private sector initiatives. Indeed, by January 2011 the price of calls had fallen 60%, and market penetration of mobile phones rose from a modest 4% in 2007 to 47% in 2011. Yet the South Pacific’s largest telecoms market is still lagging behind major economies in neighbouring South-east Asia and the rest of the Pacific region.

This has made evident the telecoms sector’s importance in the context of further legislative reforms and national development strategies that rely on the private sector’s initiatives to help deliver essential services. The ability of mobile phone infrastructure to support wireless internet access, alongside television and radio media, presents the nation with the best chance of meeting its obligations under the PNG Development Strategic Plan (PNGDSP).

AGGRESSIVE TARGETS: Outlining national development goals until 2030, the government recognises the telecoms sector’s potential, aggressively targeting an expansion of mobile subscribers. From an initial 2010 baseline of less than 40% mobile penetration, the government has set an interim target of reaching 70% by 2015 under the ongoing Medium Term Development Plan, with an end goal of 80% by 2030.

The government is also targeting an internet market penetration rate of 70% by 2030. Whereas the baseline figure was just 2.3% in 2010, an initial 20% goal set for 2015 is based on the ongoing roll-out of mobile capabilities and a fibre-optic broadband network on the back of the development of the $15.7bn ExxonMobil-led liquefied natural gas (LNG) pipeline.

Notably absent from the PNGDSP strategies, however, is a marked expansion of fixed-line telephony, denoting a preference for mobile and internet protocol technologies. Furthermore, government funding to 2015 is limited, or just PGK69.2m ($32.6m); this is principally earmarked for legislative reform and support for the new National Information and Communications Technology Authority (NICTA), which opened its doors in November 2010.

It is the government’s intention to maintain the private sector’s position at the forefront of its national modernisation initiatives. Accordingly, the government says it wants to extend the benefits of competition throughout the telecoms sector, including all forms of internet access, as well as its international gateway and the fixed-line phone service. Yet PNG’s path to reform the industry remains a long one.

HISTORY OF REFORM: Prior to its becoming a founding member of the World Trade Organisation (WTO) in 1995, the Pacific island’s national telecoms policy was based on just two pieces of legislation: a communications policy that was drafted in 1978 and the Department of Communications and Information’s (DCI) 1994 National Policy on Information and Communication of PNG. In a proposal submitted during the WTO’s 1996-97 telecoms negotiations, PNG split the DCI’s key regulatory responsibilities in two, sharing them between a newly created industry authority called the Independent Consumer and Competition Commission (ICCC), which was established in 2001, and the PNG Radio Communications and Telecommunications Technical Authority (PANGTEL).

Telikom PNG was also formally divorced from direct government control and reconstituted as a stateowned enterprise (SOE) with the government’s Independent Public Business Corporation (IPBC) as its sole shareholder. This was the start of a gradual policy shift toward liberalisation of the telecoms sector, yet its dated infrastructure was woefully unprepared to face free market dynamics. A subsequent five-year moratorium on further reform expired in 2002.

While the government and Telikom appeared to be reforming, taking steps such as signing an agreement with the ICCC to end its monopoly status in 2007, the reality was that Telikom’s monopoly remained largely in effect, with the company maintaining control over the country’s international gateway and domestic infrastructure. The end was in sight, however, as the local telecoms giant was already showing signs of trouble. By 2005 six managing directors had come and gone in an 11-month span. By 2007 Telikom’s shortfalls facilitated the fast-tracking of regulatory reform, creating space in the market.

LEGISLATIVE FRAMEWORK: PNG’s legislative reforms began in earnest with the December 2005 National Executive Council (NEC) decision to introduce mobile competition into the market. By March 2009 the NEC had approved a new National Information and Communications Technology (NICT) Act that was codified in February 2010 and implemented the same year.

The NICT Act repealed the 1996 Telecommunications Act and Radio Spectrum Act, and parts of the 2002 ICCC Act covering the regulation of telecoms. The repeal of the Telecommunications Act in turn incorporated PANGTEL under the NICT Authority ( NICTA), which is now the industry’s sole licensing and regulatory body, which also addresses consumer issues that were previously dealt with by the ICCC.

The legislation remains formative in creating a level playing field, removing Telikom PNG’s monopoly and allowing market prices to govern the sector. The act adopted a technology-neutral licensing regime, liberalised the international gateway, created a new regulatory regime for wholesale access and interconnection, and deregulated retail telecoms tariffs.

PUSHBACK: In 2007 Telikom PNG proved recalcitrant, pursuing three judicial proceedings challenging the ICCC’s decision to award licences that was backed separately by both the IPBC, Telikom’s sole shareholder, and the then-minister of public enterprises. It was an influential moment for the industry, the effects of which can still be felt today, according to Siope Ofa, an analyst at the Asian Development Bank (ADB). “The frequent policy changes have created significant uncertainty about investment regulations. Nevertheless, when PNG’s WTO telecommunications commitments were queried by the EU, the PNG government, through its latest ICT policy, realigned its policies to its WTO commitments.” PNG has not deviated from this course since, and its economic development plans remain a substantial motivation in this regard, according to Kumar Baliah, the group corporate service and commercial manager of Daltron, which is currently pursuing an international gateway licence. “The LNG pipeline is driving the speed of government reforms in this sector. The government realises you cannot support this sort of development if you do not allow free competition,” he told OBG.

NEW LICENSING REGIME: In this vein, NICTA moved in 2010 to an open licence regime, enabling previously licensed carriers and specific service providers to migrate their licences and offer all services. This has cemented the liberalisation of the sector, which is now host to three mobile operators: Digicel PNG, Telikom PNG’s Citifon and BeMobile, alongside many domestic ICT service providers.

Digicel PNG and the Indonesian-owned Green Communications (GreenCom) were both awarded mobile network licences in 2007 by the ICCC. While GreenCom’s licence was later revoked after failing to meet its benchmarks for operation, Digicel immediately emerged as the market leader, where it remains today.

Specialising in under-served markets with holdings in the Caribbean and an expanding presence in the Pacific, Irish-owned and Jamaica-based Digicel bore the brunt of public opposition in 2007, but successfully lobbied through the Irish government and the EU. The company’s subsequent response caught its opponents and the market by surprise, as it accelerated its launch from six months to three weeks, sold heavily subsidised Digicel-brand phones that were one-fifth Telikom’s price and gave away a reported 250,000 prepaid phone cards in just over a week. Within five months it had reportedly gained some 350,000 customers – 100,000 in the first month alone – eclipsing 300,000 BeMobile subscribers. The company’s growth has not slowed.

The entrance of new players has radically expanded the local mobile market. Between 2007 and 2008, PNG’s total mobile subscribers increased nearly 200% from 300,000 to 874,000. By 2010 it stood at 1.9m, reaching 30% of the country’s 6.5m people. By contrast, the number of telephone lines added doubled in the same period, from 60,000 to 121,000.

Today, Digicel has approximately 1.6m subscribers and an estimated market share of 84% based on 2010 figures, covering 30% of PNG’s area and 75% of its population. While Digicel is respected for its dynamism, winning “most innovative company of the year” at the PNG Institute of Directors Awards in 2011, its sustained rapid growth since 2007 has made competitors wary of its increasing dominance in the market.

MOBILE PRIVATISATION: Telikom PNG’s revenues have previously been sustained by its monopoly over its parent products, fixed-line assets and PNG’s international gateway. Yet vastly outpaced by mobile network competitors from 2007, Telikom sold 50% of the equity in its subsidiary BeMobile in 2008 for PGK130m ($61.87m) to investor group Capital Way (subsidiary of Hong Kong-based private equity fund General Enterprise Management Services, or GEMS), PNG superannuation funds NASFUND and Nambawan Super, and PNG Sustainable Development. The management structure was further consolidated in 2011 when the IPBC bought the remaining 50% equity for PGK6m ($2.86m), with the ADB taking a minority share.

While privatisation was a windfall for BeMobile and granted it managerial independence from Telikom, Minister for Public Enterprises Mekere Morauta condemned the move in 2011. The sale gave GEMS total control over BeMobile management and its board. “It is apparent to anyone that BeMobile is struggling to compete with Digicel,” Morauta said, going on to criticise the decisions made by GEMS. Morauta has also aired concerns over financial improprieties related to IPBC. While both sides have voiced allegations of political manipulation, Morauta’s concerns may be warranted: GEMS had the majority share of GreenCom in 2007, which collapsed under a reported PGK12m ($5.71m) debt in 2009, having never provided its licensed mobile network service in PNG.

BeMobile has recovered much of its momentum as of late, reportedly doubling its subscriber base in 2011, although it remains a secondary player. The company has reported average revenue per user (ARPU) of PGK20 ($9.52) on a subscriber base of 300,000 in 2010. Although it beat Digicel to a network licence in the Solomon Islands in 2009, it has had some difficulty in meeting the minimum benchmarks for the licence and was fined $1m by the Telecommunications Commission in 2010.

TELIKOM PNG & CITIFON: Valued at PGK447.3m ($212.87m) at the end of 2010, Telikom PNG launched its own CDMA-based mobile brand, Citifon, in 2011. For now, the brand is focused almost exclusively on the more profitable urban centres, although it will be gradually rolled out to rural areas. Citifon’s entry has been regarded less as serious competition to Digicel or BeMobile than as a means to ensure Telikom’s future relevance in the rapidly evolving market. Citifon currently remains a minor player, despite heavily discounted call rates catering to the mass market.

Although Telikom launched WiMAX services in Port Moresby, Lae, Madang, Kimbe and Kokopo in 2009, it ran into renewed difficulties with the February 2012 suspension of CEO Peter Loko and the removal of its board. Morauta cited unauthorised financial liabilities of PGK1bn ($475.9m) incurred by SOEs that have brought it to the verge of insolvency and threatened the company’s ability to manage PNG’s core telecommunications infrastructure.

Loko has since defended Telikom’s actions, noting the firm’s need for financial liquidity in PNG’s rapidfire telecoms market was compromised by three- to six-month approval delays from the IPBC and the Treasury, and that Telikom’s debt-to-equity ratio remained at just 27%. It was these delays that reportedly prompted state-owned Telikom to sell BeMobile on the back of government-mandated upgrades to the national telecommunications infrastructure.

CAPITAL COSTS: Liquidity is essential in PNG’s telecoms market, with high capital costs inflated by the country’s ageing infrastructure and the difficulty and high cost of domestic travel. Of the firms that were initially required to provide mobile network coverage to 229 locations determined by the ICCC, Digicel was the only company to fulfil this requirement. In 2012 NICTA reduced the network coverage condition imposed on BeMobile and Telikom to 147 locations, allowing BeMobile and Telikom to choose among the initial 229 areas to introduce their services.

The network coverage conditions present operators with specific logistical challenges. PNG’s terrain makes it difficult to access and construct the necessary towers on greenfield sites. Moreover, in the absence of a comprehensive power grid – just 12.4% of households had access to electricity in 2010 – many of these sites are dependent on hybrid systems of solar and battery power with diesel generators. “Of 700 Digicel towers maintained nationwide, only 160 are linked to PNG Power,” the company’s chief technology officer, Shivar Kumar, explained to OBG. “Approximately 80 sites are accessible only by helicopter, which translates into higher construction costs, with 130-150 tonnes of equipment shipped to each site by helicopter.” Moreover, disputes with landowners over access regularly disrupt or close facilities. “The problem is the security aspect. In almost every chopper site, you are losing 10-15% of the materials through theft and loss in transit. If any materials are lost, it is time-consuming to replace them given the 400 different parts required to build the structure. If you lose only or one or two parts, you have to suspend construction until it arrives, with cascading material and time delay costs,” Kumar told OBG.

Legislators partially anticipated such issues with the creation of the Universal Services Fund (USF) under the NICT Act in 2009. Financed by a 2% levy on operators’ gross revenues and with $15m in assistance from the World Bank approved in 2010, the USF will help bridge PNG’s digital divide. The World Bank’s support will provide access to telecommunications for over 420,000 rural citizens in the provinces of Chimbu and East Sepik, and facilitate public internet access in about 60 district centres.

The ADB’s $25m project in 2009 to support expansion of Digicel’s rural coverage and network capacity was tacit acknowledgement that its capabilities exceeded both the government’s and Telikom’s. This move was reinforced by subsidies from the PNG Sustainable Development Fund designed to provide coverage across the 98,000-sq-km Western Province. Perhaps PNG’s most sparsely populated province, Digicel installed around 200 towers in an area that remains, at present, unviable on commercial terms.

PRICE WARS: With the island nation’s most comprehensive network, Digicel has incurred substantial infrastructure costs that have been offset by the revenues from its leading market position, but this has in turn sparked a price war between the networks.

With mobile network operators’ preference to establish themselves in urban centres, these areas are the low-hanging fruit of the telecoms market, accounting for just 15% of PNG’s population. Yet under the ICCC’s national coverage requirements, operators are moving aggressively trying to capture the mass market, which in a lower-middle-income economy such as PNG remains very much price-oriented.

Relative disposable income levels are limited, with an annual per capita GNI of around $1300, and all operators continue to subsidise their handsets, which are locked into their respective networks. Basic handset models retail from around $25, but Citifon’s market entry in 2011 saw models offered at PGK39 ($18) in a strategy that echoed Digicel’s own entrance in 2007. Today, Digicel’s handsets rival BeMobile’s offerings at about PGK50 ($24), although it has offered special deals previously, including the introduction of similarly priced solar-powered handsets in 2009.

Calling charges between networks remain a key issue for carriers and consumers alike, and one that operators have been seeking to leverage for greater market share. Inter-network flat rates of PGK0.79 per minute ($0.37) offered by both BeMobile and Digicel have more recently been eclipsed by Citifon’s initial offering of PGK0.39 ($0.18), but the fight for market control is largely focused on same-carrier rates.

Herein, Citifon has aggressively undercut the market by as much as 95%, offering the lowest published rates, PGK0.02 ($0.01) per minute to other Citifon phones. This eclipses BeMobile’s PGK0.10 ($0.05) and Digicel’s PGK0.49 ($0.23). While undoubtedly attractive, it is unclear whether these rates will effectively undermine Digicel’s significant market lead given that its rivals have such restricted national coverage.

VALUE ADDED: While 2G and 3G network capacities will continue to feed growth, the launch of GPRS internet-enabled devices previously and the 2011 introduction of 3G network capabilities have focused market attention on value-added services from carriers (see analysis) and sparked a flurry of recent activity. Digicel expanded its 3G technology to 63 sites across six provinces in early 2012, which BeMobile is following with a PGK40m ($19.04m) expansion to increase its own net coverage by 60%. Furthermore, Oceanic Broadband Solutions and Australian Satellite Communications (ASC) announced moves to establish internet protocol centres in PNG in support of their respective partnerships with Hong Kong’s SpeedCast, a satellite telecoms service provider, and Daltron ahead of expected significant growth opportunities in the sector. While these hold the promise of cheaper and faster internet access for the country’s remote areas, much of the progress will depend on ending Telikom’s international gateway monopoly.

INTERNATIONAL GATEWAYS: PNG’s telecoms market is virtually unrecognisable just five years after the sector was liberalised, but its continuing advancement has been constrained by Telikom PNG’s monopoly over the country’s international gateways. This has perpetuated delays in the development of a strong domestic infrastructure. This is demonstrated, most notably, by ongoing efforts to connect Port Moresby to PNG’s new fibre-optic cable in Madang.

Installed in October 2010 and connected to the 7000-km PPC-1 PIPE that runs between Guam and Sydney, Australia, the fibre-optic cable represents PNG’s great hope for an internet capacity boost going forward. Despite its importance, the government took no prior initiative to provide for the cable’s connection to the cities of Port Moresby and Lae, resulting in an expected 20-month delay.

HARD WIRED: IPBC funding was granted only in January 2011 to purchase a $35m, 41.67% share in the PNG LNG fibre-optic cable currently under construction, alongside a further $25m for comprehensive integration of the cable into Port Moresby’s existing fibre-optic network. While the construction of the new line will radically alter PNG’s capabilities once the cable becomes operational in late 2012, it has left service providers heavily dependent on costly very small aperture terminals (VSAT) and terrestrial microwave transmission backbones to connect the urban centres to the 10-GB ps-capacity PPC-1 cable.

Prior to this, PNG has been principally reliant on the second-hand APNG-2 submarine cable connecting Port Moresby’s digital exchange in Boroko with Cairns, Australia, and satellite uplinks to the Optus A2 satellite in Port Moresby and Lae. Controlled by Telikom PNG, service providers’ rates have been subject to the state monopoly, reportedly charging rates of PGK0.1 ($0.05) per MB to internet service providers (ISPs).

However, licences issued by NICTA in July 2011 to service providers Telikom PNG, Daltron, Datec, Hitron, MiCom, ComServ, Global Technologies, Data Nets and Startech, have created a shift in the services that network operators are able to provide. These changes will have direct ramifications on market prices, with results that are expected to be seen throughout 2012.

Telikom PNG received the network gateway, network and application licences while Daltron also received a network licence that allows it to establish ICT infrastructure within PNG. All others, including Daltron, received the application licence, which has opened the door for them to apply for international gateway licences that may be issued after July 2012, and as a result Telikom’s monopoly is coming to an apparent end under NICTA’s continuing market reforms.

Speaking with OBG, Daltron’s Baliah said: “Only 48% of the of the Telikom-owned undersea cable is actually working and the remainder is at 99% capacity, so all big ISPs are looking for alternatives once their international gateway licence applications are approved. Additionally, once the Madang fibre-optic cable comes on-line, Telikom will be confronted with excess capacity and will be forced to lower its prices if it plans to maintain its customer base.”

The government has commissioned a national broadband policy that will be published in 2013. The policy is expected to rely heavily on the LNG fibre-optic cable as the national backbone, with tributary channels feeding into proposed economic development corridors outlined in the PNGDSP, wherever possible. In preparation for the improved infrastructure, PNG’s service providers have been aggressively positioning themselves ahead of the opening of the new cable.

END-TO-END: Telikom PNG’s relative inactivity prior to 2007 means much of the market remains virgin territory in terms of ICT capabilities. These institutional deficiencies are still an issue today.

Market liberalisation has enabled and encouraged companies to diversify their business models to provide end-to-end ICT services, which has been visible in growing capacity expansions amongst public and private operators. In 2010 Telikom PNG commissioned a second, back-up internet gateway in Madang for all ISPs. It is also currently leading a nationwide expansion of its existing 600 VSAT stations under a PGK50m ($23.7m) 2011 government-funded memorandum of understanding. Former CEO Peter Loko reported Telikom’s intention to invest a further PGK200m ($95.18m) in VSAT capacity in 2012, but the project’s implementation is currently uncertain following the SOE’s management overhaul.

This was followed in 2011 by a PGK1.2m ($571,080) lease agreement to centralise the government’s database and an April 2012 deal to provide an Integrated Government Information System (IGIS), with the latter funded by a $53m loan from the Chinese government-owned Exim Bank. The decision to partner with Chinese firm Huawei in this project, however, led to concerns amongst the public in light of a 2010 report released by PNG’s ambassador to India, Tarcy Eri, that the company had come under scrutiny from the national security agencies of India, the US, UK, Australia, Indonesia and others for “concerns about the propriety and integrity of Huawei Technologies in supplying telecommunications equipment”.

Telikom launched a multiprotocol label switching (MPLS) service for corporates in the same year, providing high-speed data capacity and offering up to 50% savings on wide area networks (WANs). Telikom’s control of the international gateways has enabled it to undercut PNG’s other players, although NICTA granted Digicel PNG an international gateway licence in July 2011, giving it the ability to compete with Telikom on a more even playing field. Following licensing approval, Digicel has now moved towards the offensive, industry observers say, looking to challenge Telikom’s dominance in the area with the purchase of local ISP provider Data Nets in 2011. Data Nets was established in 1993 with a network incorporating 30 towns outside PNG’s main urban areas, and the acquisition of Data Nets also included its subsidiary NEC PNG, which offers private automatic branch exchange (PABX) and voice services for corporations.

Australian firm Pactel International and local VSAT provider Remington Communications also launched new domestic satellite capabilities in 2012 suited to PNG’s geographically fractured market. The latest project expands Remington’s portfolio of corporate voice and internet services as the largest supplier of satellite communications in the country.

STRETCHING OUT: Expansion has been consistent across the sector; from just seven secure internet servers in 2007, PNG’s supply multiplied six-fold to 48 in 2011 according to the World Bank, up 54% yearon-year from 2010. Growth among fixed-line telephony services was more conservative, reaching a total of 121,172 lines in 2010, but its trajectory now parallels that of mobile networks with an average rate of expansion of 34% since 2008.

Yet even this growth may be comparatively muted. “Since market liberalisation in 2007, the innovation demonstrated by the private sector players who have come onto the scene has helped to shape the market,” Daltron’s Baliah said. “Having plateaued after the first few years, we expect there to be renewed innovation amongst industry players as competition increases once the fibre-optic cable comes on-line and there is a market correction in pricing.” In itself, this has provided further opportunities for the industry, which is carefully eyeing the projected economic impact of the PNG LNG development.

CORPORATE COMMUNICATIONS: Present since 1977, Daltron became the first ICT firm in PNG to commercially assemble computers under the Niulogic banner in 1995 and is fast-tracking the development of its LAN, data centre and cloud capabilities to complement its existing software development and support services. This is expected to boost the company’s growth beyond that of its competitors.

Daltron’s VSAT platform and architecture underlines the difficulties inherent in developing the local market. While VSAT remains costly, it is also necessary to cover the country’s geography. Moreover, along with Datec, Hitron, Remington, Global Internet and Creative Solutions, Daltron was granted an international gateway licence in April 2012, putting it in a prime spot to emerge as a market leader. VSAT technology, which is reportedly endorsed by Remington Communications, Hitron and Global Internet, will likely provide added immunity from landowner action and resulting disruption of the overland fibre-optic cable. This will make VSAT a more secure and dependable long-term solution, industry players have argued.

Building on its existing network infrastructure, Digicel anticipates the largest future growth vectors will be in corporate services, and its 2011 acquisitions have bolstered its means to start building wired infrastructure and capacity. This, in turn, opens up the market to alternative services, and Digicel already has its eyes set on consumers far beyond PNG’s principal urban centres, corporate executives have noted.

THE WHOLE PACKAGE: Corporate clients are beginning to demand more, notes Digicel’s Kumar, including leased lines, internet circuits, office LAN structures, and virtual private networks for remote offices. The company has not yet moved into cloud computing, data storage or virtual server environments, but it can provide the equipment to do so, and with BSP and Air Niugini among its clients, Digicel is positioning itself as a one-stop integrator, CEO John Mangos said in 2011. Using its mobile and NEC capabilities, Digicel is establishing a corporate operations centre and an ICT team to provide end-to-end solutions. “If you are able to provide, the customers are ready to take,” Kumar said, noting the growing sophistication in the market, which previously settled for availability.

It is an observation that extends to Daltron’s retail arm, according to Baliah. “The market is not just about cheap products, it is about quality products, and with economic growth, we are seeing more sophisticated consumer demand for things like iPhones, tablets and gaming consoles. If you go to outside of Buka in Bougainville, there is limited access to electricity, but there is still a demand for IT products that run on diesel and coconut-oil generators.”

ROOM FOR GROWTH: Baliah’s observation underlines a further complexity and opportunity in the market. The profusion of internet access in the country has been a catalyst for market sophistication and growth, albeit constrained by network capacities and disposable income. Yet PNG’s market is well placed for the adoption of new technologies. While the number of internet users is small, estimated at just 125,000 in 2011, the number of personal computers per 100 people as tracked by the ADB in 2008 was substantially ahead of Fiji and just short of Thailand’s middleincome economy, at 6.4, 6.0 and 6.7, respectively.

Rapid uptake of digital trends, including social media sites Facebook and Twitter have already spurred a process of ongoing social engagement that Digicel and EMTV are positioning themselves to harness, having been issued content licences by NICTA in early 2012. The socio-economic indicators suggest that for PNG’s telecoms companies, market mechanisms are already in place to stimulate further growth, once the last vestiges of the state monopoly are removed.

OUTLOOK: PNG’s elections in 2012 are integral to future growth and economic prospects because they will stabilise and codify advances made since market liberalisation began. The intervening years have revealed a sector that has ongoing potential to produce real benefits for the population and is led by the private sector. Despite free market dynamics, obstacles remain to the sector’s development and PNG’s growth is from one of the region’s lowest bases. Yet, the momentum shows little sign of slowing and service providers will continue to diversify their offerings on the back of continued economic growth linked to the PNG LNG project and other developments.