High Tide
Prying Open The Door
Privatization Isn’t The Only Answer
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“I do not spend any more than three months looking at reports or figures on whether to acquire a company in a new market,” O’Brien told the Caribbean International Leadership Summit. “Any longer and you would probably get paralyzed by data and never make a decision.”
It’s a strategy Digicel has clearly employed in the Pacific region.
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Digicel $10.8 million of the estimated $41.6 million needed to implement its Samoa rollout.
Digicel in November announced it was in the process of acquiring Tongan telco Tonfon Communication.
Digicel also has interests in Fiji, an experimental license in Solomon Islands and in September 2007, the company applied to the Kiribati government to obtain a license to begin operating a mobile service there.
But it is in PNG where the company has provoked the most controversy and raised some of the questions most critical for governments in the process of deregulating key service sectors. Digicel PNG has obtained a mobile license in Papua New Guinea and the IFC also intends to lend the operations there “up to $40 million of the estimated $160 million total cost”—although that project is pending approval.
However, the terms of that license have changed since first issued. The government has gazetted a revised ICT Policy, which would see the Digicel and another newly licensed operator be retained as “reseller competitors under revised licenses.” Digicel would have to sell or lease its now-considerable assets to government owned Telikom.
Prime Minister Sir Michael Somare says while competition will happen,
ownership of the telecommunications infrastructure should stay in Papua New Guinean hands. His Minister for Treasury says Digicel has already contributed to 0.7% growth to the Gross Domestic Product (GDP) of the country, and warns that business confidence could be damaged if competition was “hindered.”
He’s right. Already potential investors and existing businesses in Papua New Guinea are watching the flip-flopping on policy in this sector with bemusement. But the genie is already out of the bottle. PNG’s mobile phone users have seen the future, and it is broader coverage and bills running at less than half the cost they were previously used to.
While this debate is centered on what could be considered non-essential services—there are some applications to other privatization debates—including the need to be transparent.
Think of the Northern Marianas for example, where Gov. Benigno R. Fitial has indicated that resolving some of the commonwealth’s ongoing energy problems will involve privatization of the Commonwealth Utilities Corp., or at least significant aspects of its functions. Similarly, Guam continues to consider a public-private partnership to manage its port cargo handling equipment and facilities—a matter that has taken on extra urgency with the planned military expansion on the island. Both cases have their opponents.
Privatization won’t be the answer in each and every problematic sector in the Pacific Islands—although it’s clearly a solution for many where our governments have been unable to improve, or even maintain standards. But having a well-articulated vision, giving constituents a chance to debate and understand the issues, and being consistent once a path has been chosen, well, that would be a good start.
