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Digicel sets sights on Solomon Islands, East Timor
Wednesday, November 04, 2009
WELLINGTON, New Zealand - The Pacific islands are the last frontier for mobile telecommunications but the arrival of Irish-owned Digicel Pacific in the past three years has brought about a revolution.
Residents of the islands and visitors all have horror stories about the poor service and sky-high charges of telecoms monopolies in
the Pacific.
But the arrival of competition through Digicel means Pacific islanders are beginning to experience some of the benefits taken for granted elsewhere in the world.
Digicel opened its first Pacific operations in Samoa on November 1, 2006 - exactly three years ago.
Now it has expanded to Papua New Guinea, Tonga, Vanuatu, Fiji and Nauru, a total market of 7.5 million people, and the company has invested more than US$500 million and now employs 1,100 people.
Digicel shows no sign of slowing down, planning to expand to the Solomon Islands, East Timor and Tahiti over the next year, Digicel Pacific chief executive Vanessa Slowey said.
"It's most certainly improved the lives of millions of people in the region," Slowey said of the new competition.
Most of the island nations Digicel entered were previously served by a state-owned mobile monopoly, except for Nauru which had no commercial mobile service at all.
Rod Duncan, an economics lecturer with an interest in Pacific development, of Charles Sturt University in New South Wales, Australia, said telecommunications in the Pacific were "appalling", with some of the highest charges anywhere in the world.
"No wonder it's so easy for Digicel to come in against these great vast, inefficient, lumbering beasts that existed by gouging their customers."
Owned by Irish telecommunications entrepreneur Denis O'Brien, Digicel in 2001 entered the Caribbean, where the company now operates in 26 markets.
The company's experience in establishing itself in the Caribbean's many small island markets made expanding into the Pacific a logical move.
"If you look at the Pacific region it's a mirror image of where the Caribbean was about eight years ago, with a high demand for communications services, widespread customer dissatisfaction, generally high tariffs and low mobile penetration," Slowey told AFP.
The company has vastly increased the number of mobile users in the Pacific by offering subsidised phones and much cheaper rates.
"If I put the mobile device in people's hands, if I make it affordable enough to use that device, then I have got a customer," Slowey said.
In Samoa, national call charges have fallen by 50 per cent, international call charges dropped 60 per cent and the area of mobile coverage has been greatly expanded, Slowey said.
The number of mobile users in Samoa has jumped from 13,000 to 95,000, about half the population.
In Papua New Guinea, a mountainous nation of six million people, the cost of calls has fallen up to 60 per cent while mobile penetration has quadrupled since Digicel started operations in mid-2007, the company says.
The tiny nation of Nauru, with a population of around 10,000, had no commercial mobile service before Digicel entered the market in August this year.
"Nauru is a fantastic success story. Within a week, 50 per cent of the population bought a phone and were on the network," Slowey said.
Duncan agreed Digicel's entry into the Pacific market has been a rare economic success story in the region.
"I think it's the brightest story in the Pacific in the last decade at least," he said.
Better communications spur small business and improve people's lives, he said, citing a story about fishermen in Papua New Guinea bringing their catch in and being able to phone relatives on different wharves to find out where the best prices are.
Slowey declines to discuss the private company's profitability but says Digicel is focused on the long term.
"If you are going to go in there and take all your profits out of the company and not reinvest, you are on the road to failure," he said.
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