Kumul Telikom urgently looking to build undersea cable to Sydney, says Chairman

Mahesh Patel, the chairman of Kumul Telikom, told the Business Advantage Papua New Guinea Investment Conference that the newly formed entity is urgently looking to build an undersea fibreoptic cable to Sydney. He said the aim is to reduce telecommunications wholesale prices by two-thirds.

Kumul Telikom’s Mahesh Patel. Source: Business Advantage International

‘It has been a bee in my bonnet since I have been Chairman,’ Patel said of the need to upgrade PNG’s oldest connection to the worldwide web, currently sited at Ela Beach in Port Moresby (a second, more modern connection, is sited in Madang).

‘We should have done it four years ago but that is water under the bridge now. We have chugged along over the last four years looking at various options.

‘It has come at a time when the economic situation is looking pretty bad. Funds have dried up, so we need to look at various options.

‘Four years ago, we could have funded it ourselves. We had the capability and capacity financially.’

Options

Patel said ‘there is huge urgency to get it started—yesterday’. The funding, he said, could come from different sources.

Representatives of PNG’s two superannuation funds, Nambawan Super and Nasfund, told the conference they would be interested in investing in the cable.

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‘We have the option of private sector participation,’ Patel said. ‘The expectations of returns are obviously very high there.

‘We have the World Bank, who are keen to fund it—it is a slow process, but cheap money.

‘Sydney is very well connected, and we can get it done very quickly.’

‘We have got other private financial institutions who are looking at “build, lease and transfer”. Again, an expensive model but it can be done quickly. All three options are on the table.

‘We are looking at going to the Cabinet as early as in the next couple of weeks with a proposal to proceed.’

Pacific

Patel said the focus will be on connecting PNG directly, rather than through other Pacific Islands—one model previously being considered.

‘The most logical route always has been—it is the advice we have had from Telstra— to go directly to Sydney. Sydney is very well connected, and we can get it done very quickly.’

He said the cable would only be connected to Port Moresby. ‘The inter-island submarine cable will then connect to all the other ports [in PNG]. ‘

According to telecommunications sources, it should take a minimum of 18 months for a new cable to be operational once the project is given the green light.

Funding

Patel believes Kumul Telikom will have an improved ability to fund the project, following the government’s decision to bring all state-owned telcos—PNG Dataco, Telikom and bmobile Vodafone—under a single board.

Fibre optic cable

‘Four years ago, we had a very clean balance sheet. All the assets sat in the one box and we could go out and commercially borrow, and it could be serviced with the revenues we had.

‘But, with the split up of all the entities, it just got messier. Once we have all the assets in one box, I am sure we can go out and borrow, but it is just not happening fast enough.’

Exposure

Patel said Bmobile’s commercial relationship with Vodafone UK had been useful. Telikom’s engineers are ‘excellent’ but they ‘lack exposure to international standards’.

‘Aligning ourselves with an international operator (like Vodafone) will help our people,’ he said.

‘As soon as the undersea cable is in we will have the capacity to drop the price to the standards that they get in Australia.’

‘All we need to do is see what is happening in the rest of the world: you are talking about e-commerce, mobile apps, e-education, e-health, a whole bunch of these can be moved on to the platforms.

‘As soon as the undersea cable is in, we will have the capacity to drop the price to the standards that they get in Australia.’

Patel estimates that wholesale prices should drop by two-thirds. But to reduce the price to consumers it will be necessary to create more ISPs and ‘more retail focus’.

‘Four years ago, we had poor quality internet and people were paying 200 kina per gigabyte; today the rate is 25 kina and I think that can go down further.’

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