Industry Trend Analysis - Merger A Positive Force In Difficult Market - MAY 2017

BMI View: The merger between PNG's three state-owned operators has the potential to reduce infrastructure duplication by streamlining and centralising operations, once bureaucratic hurdles are overcome. It will also provide competition for the dominant operator Digicel and we expect subscriber prices to be reduced over the medium-term.

In February 2017, the Papua New Guinea (PNG) government announced that the country's state-owned operators - Telikom, Bmobile and PNG Dataco - will consolidate to form a single entity, Kumul Telikom. The merger is to be undertaken as part of the Kumul Consolidation Agenda, a process under which the Independent Public Business Corporation (IPBC), a statutory corporation that holds number of state-owned enterprises, is being transformed into Kumul Consolidated Holdings Limited.

Under the merger, the three entities will be able to share resources and infrastructure, and will have the potential to be more cost-effective and competitive. The sharing of infrastructure will reduce duplication of manpower to some extent, as towers previously owned by Telikom, Bmobile and Dataco will now be available as one entity. However, we expect the centralisation and streamlining of operations will take time to achieve due to bureaucracy and union opposition.

More Competition Postitive For Subscriber Growth
Papua New Guinea - Mobile Market (2015-2021)
e/f=BMI estimate/forecast. Source: National Sources/BMI

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