Infrastructure investments and increased competition to support burgeoning digital economy in Papua New Guinea

With the completion of two undersea fibre-optic cable projects due in the near term, Papua New Guinea’s ICT industry is on the cusp of significant change. The new infrastructure should bring down costs, improve internet speed and reliability, and galvanise the ICT sector through the proliferation of digital and cloud-computing industries. Internet costs in PNG are among the highest in the region, with many businesses paying extra to have a combination of fixed-line, satellite and microwave wireless plans to ensure continuity of service in the event of disruption. As service provision improves in the coming years, funds previously allocated to securing a stable connection will be channelled towards other investments. In this light, the government has identified the digital economy as a primary area of focus. Solid foundations should allow small and medium-sized enterprises to tap global e-commerce channels, while enabling digital businesses to flourish across the broader economy.

Structure & Oversight

The regulatory body in charge of overseeing the industry is the National Information and Communications Technology Authority (NICTA), which was formed in 2010. As the regulator, NICTA sets benchmark interconnection rates; issues radio, broadcast and internet licences; and enforces the content restrictions set by the censorship board. The authority is also tasked with implementing goals established by the PNG Development Strategic Plan 2010-30, which aims to increase mobile, internet, and television and radio penetration to 80%, 70% and 100%, respectively. Part of the challenge in accomplishing such goals is the complexity of extending services to remote and mountainous areas with low population density and average revenue per user.

ICT service operators receive a mix of subsidies deducted from their combined revenues and World Bank funding to help reach coverage targets. NICTA receives a mix of licence, spectrum and regulatory fees, and a percentage of turnover from operators.

Industry Roadmap 

In March 2018 local media reported that, under the administration of former Prime Minister Peter O’Neill, a taskforce including the PNG Digital Commerce Association was working on a national ICT roadmap to solidify policies for the rollout of more advanced technologies, as well as to provide businesses with a clear investment path forward. However, with the resignation of O’Neill in April 2019 and the swearing in of James Marape the following month, it remains unclear whether the new administration will pursue similar development plans, notwithstanding calls to do so. “We strongly believe an ICT roadmap that aligns institutional actors, including government, academia, and research and training organisations, with private sector initiatives will be of great importance moving forwards,” Jacky Xu Qiang, CEO of Huawei Technologies PNG, told OBG, adding that the company expects every $1 invested in PNG’s ICT sector to yield $3-5 of economic gain.

Service Providers 

There are three major mobile operators: Digicel, Bmobile (a subsidiary of Vodafone) and Citifon (a subsidiary of Telikom PNG and commonly known in PNG as Telikom). According to NICTA data from 2016, Digicel, which entered the country in 2007, had an estimated market share of 94%, followed by Bmobile (4.8%) and Citifon (1%).

With Digicel dominating the local market, a 2017 merger between the state-run entities Bmobile, DataCo and Telikom PNG pooled government-owned resources with the broader aim of creating an entity that could become a serious competitor in the local telecoms market. This strategy appears to be working already. According to GSMA – a London-based trade institution that represents operators around the world – in 2018 Digicel held a market share of around 92% in PNG, followed by Bmobile with 5.5% and Citifon with 2.5%. Additionally, in April 2019 the Independent Consumer and Competition Commission approved the transfer of Bmobile shares to Kumul Telikom Holdings, which has been tasked with overseeing the state-owned interests in the ICT sector.

Network Infrastructure 

DataCo was established in 2014 to construct PNG’s national transmission network, which, upon completion, will provide wholesale, non-discriminatory telecoms transmission services. The network’s viability will depend on the Australian government-led Coral Sea Cable System (CSCS) project linking Port Moresby with Sydney – which could carry more than 1000 times PNG’s current data transmission capacity – as well as the Kumul Submarine Cable that is being built by China’s Huawei, which links Port Moresby with the major towns along the coastline, including Lae.

Both cables are on track to enter service by early 2020, at which point DataCo will be responsible for management, operations and maintenance (O&M) of Huawei’s Kumul Cable. DataCo will meet O&M expenses by wholesaling to internet service providers (ISPs), while facilitating the development of a competitive marketplace for internet services in the process. The incoming infrastructure is also expected to provide flexibility in the event of a natural disaster. Situated on the Pacific Ring of Fire, PNG is among the world’s most earthquake-prone countries, with tremors common across the Kumul Cable footprint.

The additional infrastructure is already proving beneficial. Until the recent completion of Phase 2 of the Kumul Cable, for example, small ISPs largely depended on satellite services and were unable to compete with larger operators that owned their own national microwave networks. “We have now connected Madang to Port Moresby, and since then, three new localised ISPs have sprung up,” Paul Komboi, managing director at DataCo, told OBG. “One has tripled its capacity purchase value, and the other two have acquired licences ahead of the introduction of commercial services.” Fibre-optic latency is now between 60-80 milliseconds, compared with 350-500 milliseconds for satellite, enabling businesses with low-latency requirements to operate.

One reason why a viable roadmap is deemed essential by industry stakeholders is that it will drive sufficient demand for DataCo to cover its cost and bring down prices. DataCo only has three large customers – Digicel, Bmobile and Telikom PNG – with Bmobile being the largest customer in terms of bandwidth. However, DataCo’s mandate does not allow it to build the last mile – that is left to the ISPs.

Connecting traffic from PNG’s other cities to the Kumul Cable is also an evolving challenge, according to Komboi. “We already have an undersea cable running into Madang, but this only had a 30-40% utilisation rate in 2018, as we did not have a network to aggregate traffic before the Kumul Cable. Now, with the Kumul Cable, we are beginning to see growth approaching 90% utilisation on the PIPE Pacific Cable between Madang and Sydney,” he told OBG.

There are some doubts over whether DataCo will be able to reduce prices to a more competitive level, particularly as it must also repay the $200m loan to fund Huawei’s work on the project. “We all hope costs will come down, but it is a question of how much inefficiency might have been built into the project and the cost of O&M,” Brad Barlow, general manager at Nestlé PNG, told OBG. O&M issues were highlighted in May 2019 when a 7.2-magnitude earthquake in Morobe Province caused multiple breaks in the Kumul Cable between Madang and Lae, and Lae and Popondetta. DataCo was able to restore service by leveraging 03B satellite transmission that was put in place for the APEC Leaders’ Summit in November 2018. The repair of the subsea cable was not covered by regional cable storage and repair agreements as the full cable network is still not complete yet.

Australia will provide two-thirds of the funding for the cable, with PNG and Solomon Islands contributing the remaining one-third. Exactly how a special purpose vehicle (SPV) to oversee O&M for the CSCS will be funded is yet to be confirmed. The government is withholding its share of PGK324m ($98.3m) project financing until the network is completed and the SPV is transferred to the governments of PNG and the Solomon Islands (see analysis).


According to industry sources, there were 35 mobile phone subscriptions per 100 people in 2018, compared to 36.5 subscriptions per 100 people in 2012. Data from Digicel shows, however, that access has improved considerably in recent years, with over 80% of PNG’s predominantly rural population having mobile coverage in 2018, through a combination of 2G, 3G and 4G LTE networks. As it stands, 2G connections account for 55.5% of the market, with 3G and 4G taking a roughly equal share of the remainder, according to GSMA. Since 2010 mobile usage has risen as data costs declined, yet mobile internet subscriber penetration remains low, at 13%. Prepaid connections account for over 90% of the market.

In July 2019 the government announced price cuts of up to 80% on data bundles offered by Bmobile and Telikom PNG, promoting plans starting from PGK5 ($1.52) for 1 GB per day to PGK90 ($27.30) for 20 GB per month. “Our ability to lower prices comes from the introduction of new infrastructure, such as O3B satellite links, [and a] domestic cable that provides improved domestic and international transmission,” Reuben Kautu, deputy chairman of Kumul Telikom Holdings, told local press that same month.

According to PNG’s 2019 budget, the previous administration was considering implementing a turnover tax on mobile telecoms companies. However, it remains unclear whether the new government’s focus on bringing down prices for consumers is compatible with taxing companies, as any additional tax would likely be passed on to the consumer.

Key Developments 

In April 2018 the government announced Bmobile would absorb Telikom PNG’s 4G services, as well as about 400 of its base stations, bringing its total to more than 600. Bmobile is migrating over the value-added services carried on its 2G and 3G networks to 4G subscribers, which is in line with the company’s aims to take one-fifth of the 4G market by the end of 2019.

Digicel is also in the process of upgrading its towers, converting 2G into 3G, and 3G into 4G, with a view to have 80% of the population covered by 3G by 2020. To this end, the company is building an additional 62 new towers and upgrading 173 towers to 3G and 4G, according to Colin Stone, CEO of Digicel, who told OBG that while Digicel is the dominant player nationwide, in urban areas the company serves around 60% of the market. Stone noted that vandalism, including the removal of cell tower solar panels – and the fact that maintenance work must be conducted using a fleet of helicopters – raises costs in comparison to other markets globally. In September 2018 Sam Basil, the then-minister for ICT, rejected calls from NICTA to force Digicel to charge the same price for on- and off-network calls. According to Digicel, such a mandate would force the firm to discontinue its popular 1Tok data plans, which are aimed at low-income individuals. Basil told local media at the time that he was mindful of Digicel’s 2.4m subscribers, many of whom were reliant on access to the 1Tok bundles. While Digicel is rolling out last-mile fibre connections, as with all operators in PNG, the firm faces issues sourcing the foreign exchange necessary to import high-cost technical equipment.

In July 2019 Fiji-based Amalgamated Telecom Holdings (ATH), through its subsidiary ATH International Venture, acquired a 70% stake in Digitec Group, which is active in PNG, Singapore and Australia. ATH owns 100% of Telecom Fiji and Vodafone Fiji. The deal, worth around $13.3m, could allow ATH to partner with an existing mobile operator or share facilities.

The impending connection of PNG’s new subsea cable systems has raised questions about the viability of satellite internet providers, particularly those serving coastal areas that will likely switch to cable coverage. However, demand for such services is expected to remain robust. For example, the extractive industries will need reliable connections in remote areas.

Fixed Internet 

Since the early 2000s fixed-line density has remained static in PNG, with just 1.9% of the population having a subscription in 2018, according to the ITU. Mobile broadband penetration stood at 10.9% in 2018, while just 0.2% of the population had a wired subscription. Speed tests from Broadband Speedchecker conducted between October 2018 and April 2019 found that the average download speed stood at 3.23 Mbps, with Telikom PNG offering the fastest rates, at 7.22-11.11 Mbps, followed by Digitech (3.15 Mbps) and Bmobile (2.57 Mbps).

In a 2018 report on digital transformation in PNG, GSMA noted that internet usage skews towards urban centres, with more than two-thirds of users being in Port Moresby and Lae. The report also suggested that the internet-enabled population is young, with 48% between the ages of 18 and 24, and 82% under the age of 34, indicating the potential for digital literacy training to boost uptake. Connectivity and power issues also pose considerable barriers to internet access in rural areas, but the PNG Electrification Partnership, announced in November 2018, will seek to address this issue. Under the deal the US, Australia and Japan will work to bring PNG’s electrification rate from 13% as of 2018 to 70% by 2030 (see Energy chapter).

“If you want digital transformation, people need access to all the building blocks imperative to a growing economy, such as reliable roading and power supply,” Digicel’s Stone told OBG. “The economy is making large steps in the right direction, but stakeholders need an integrated solution to the restricting factors in the economy and how the market will work through these in the long term to develop not just digital transformation but also market transformation.”


Despite the lack of a clear government-backed roadmap, businesses in PNG are positioning to take advantage of the forthcoming changes and the anticipated uptick in demand for ICT services. “We have made investments to upgrade our data centre so that we can provide cloud solutions and services,” Gokul Naidu, CEO of Datec PNG, told OBG. “We are also conducting capacity-building in cybersecurity, and training and educational services.” Datec foresees increased demand from the government as well as the banking and retail sectors, including disaster recovery and business continuity solutions, with both local and overseas cloud service providers. Digicel is investing about $10m in cloud-computing hardware, according to industry media reports in early 2019. It is expected that such infrastructure investment will reduce the overall cost of IT services by more than one-third.

As infrastructure has become more developed, opportunities have emerged related to the application of technology. “The benefits of the digital world were previously not available in PNG due to problems with access, reliability, cost and capability,” Peter Williams, CEO of Deloitte Digital, told OBG. “The improved infrastructure has led to advancements in reliability and price, and now PNG should focus on accelerating uptake by facilitating mobile money and e-commerce.”


In November 2018 the new National Cyber Security Centre, jointly funded by the governments of PNG and Australia, opened in Port Moresby to protect digital assets related to both the 2018 APEC summit and critical IT infrastructure. The Australian support is part of a three-year memorandum of understanding, which looks to develop a cybersecurity framework, including financing for training. As PNG becomes a more open-data environment, businesses and consumers will need to improve their cybersecurity awareness and protections, which creates opportunities for stakeholders in the field. “Financial institutions are early adopters of cybersecurity solutions in PNG, and other sectors are realising the need for such investments to ensure their systems are well protected,” Naidu told OBG, adding that corporate customers are looking at storing their data off-site, in keeping with global cybersecurity norms.

E-commerce is touted as a segment with huge potential in PNG, but as Ian Clough, chairman of local retail chain Brian Bell Group, told OBG, the ICT element is just one part of the picture. “We also need to have a secure payment gateway so we do not lose consumer confidence, not to mention proper fraud protection and cybersecurity measures,” he said. The new environment will also require additional training in hardware and software solutions, Nestlé’s Barlow told OBG. “It will create a massive shift in mindset.”


With internet availability, speeds and affordability all set to improve with the completion of the two subsea cable projects, opportunities should abound across the ICT value chain. Potential advances in the digital economy are also expected to empower a broad array of economic actors. However, while the subsea cables will certainly shake things up, they are not a panacea. Their coastal focus leaves remote areas under-connected, and building the infrastructure to bring these regions online remains a challenge. Having said that, the PNG government’s move to reduce mobile data prices suggests that it is serious about putting the digital economy at the top of the agenda.


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The Report: Papua New Guinea 2019

ICT chapter from The Report: Papua New Guinea 2019

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