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‘Exciting’ Times Ahead for FINTEL as Merger Looms

‘Exciting’ Times Ahead for FINTEL as Merger Looms
Fiji International Communication Limited (FINTEL) chief executive officer George Samisoni. Photo: Sheldon Chanel
July 21
11:00 2018

Fiji International Telecommunica­tions Limited (FINTEL) expects to complete its proposed merger with Telecom Fiji Limited (TFL) by September this year, the company’s chief executive of­ficer says.

The move will see TFL takeover the inter­national telecommunication provider’s re­tail and wholesale operations.

“At the moment it’s going through the legal merger process and it will go to Court be­fore it is finalised,” says George Samisoni, who has been at FINTEL’s helm for four years now.

“Initially, there were saying November last year so there can be further delays in the process.

“But I think Amalgamated Telecom Hold­ings (ATH) is confident of seeing it through by September this year.”

FINTEL operates a submarine fibre-optic cable terminal and a satellite earth sta­tion from their headquarters in Vatuwaqa, Suva.

It also provides the region access to the Southern Cross Cable connection (SCC), an undersea network that has direct links with Australia, New Zealand and the U.S.

However, FINTEL is facing stiff competi­ton from top telecommunication providers across the world, who see the Pacific Islands as a region ripe with opportunities.

Mr Samisoni says an open telecom market caters for this sort of competition.

He believes FINTEL has no option but to adapt and raise its level of service delivery to internationally competitive standards.

The merger with TFL is designed to fur­ther these goals and make conducting busi­ness for clients more seamless, he says.

Government-backed ATH completed a multi-million dollar to acquire FINTEL in 2012.

Since then, the company’s goals have shift­ed from the Fijian market to a more region­al customer-base.

With the lifespan of the Southern Cross Cable system coming to an end in 2030, FIN­TEL is looking at new international access routes. for international access.

Mr Samisoni says the Southern Cross NEXT system is the obvious replacement.

But, he says, FINTEL is also considering the Hawaiki submarine cable that links Australia and New Zealand to Hawaii and, by extension, mainland United States.

Consumer demands have also been in­creasing, Mr Samisoni says,

As a wholesale telecom provider, FINTEL’s primary objective is to supply the infra­structure and bandwidth for retail telecom carriers.

Mr Samisoni and his team may find them­selves in the spotlight more often with the latest development announecd in the coun­try’s 2018/2019 National Budget.

Along with the close to $40 million alloca­tion for the sector, Government has decided to penalise mobile telecom carriers whose network suffer outages.

“I think it’s a good move, and will keep car­riers alert,” Mr Samisoni said.

“But, since everyone still mostly depends on FINTEL, if anything goes wrong they’ll turn to us.”

In an interview, Mr Samisoni outlined how FINTEL’s priorities have shifted relative to the changing market and consumer trends.

He also tells the story about how FINTEL tried to diversify its business, including ex­ploring the option of a mobile licence, in a bid to survive commercially.

Mr Samisoni reports a steady flow of rev­enue and good profitability, amid big money investments undertaken by ATH.

 

What are FINTEL’s immediate and future goals in the Fiji and regional market?

There are big goals for us. As you are aware, we have move to the re­gional market now. We have three island countries that are connect­ed at the moment – Tonga, Vanua­tu and Samoa.

So you see the responsibility for us is not only for Fiji; it’s for the islands as well.

We virtually control their econ­omy, if you see Informational Communication Technology (ICT) and how important it is in today’s world.

For Samoa, Tonga and Vanua­tu, to access the web they con­nect through us and we put them through to the Southern Cross ca­ble.

We have also spoken to New Cal­edonia. New Caledonia has got a link to Sydney direct and they are now looking for redundancies.

We are optimistic about that and by the end of next month should hear the result.

The Hawaiki submarine cable that links Australia and New Zea­land to Hawaii and mainland Unit­ed States, is another cable system that we’re looking at.

I think because of our geographi­cal location and our economy, com­pared to other Pacific Islands. It’s not only telecommunications – if you look at shipping, airlines and other sectors, Fiji has become quite important.

Hawaiki is more or less similar to the Southern Cross system.

They have gone ahead and put a branching unit in Fiji waters wait­ing for somebody like us to con­nect.

As you are aware, Fiji at the mo­ment has the only landing station in international access, which makes us very vulnerable.

I mean even though there’s two cables coming in to this station with Southern Cross, we are look­ing at another landing station that will give Fiji and the Pacific Is­lands resilience.

That’s why Samoa is landing in Savusavu and it is up and running now. So traffic for the likes of Tel­ecom Fiji Limted, Vodafone and Digicel is going through that cable to Vanua Levu.

They had their radio system but I think more emphasis will be kept on cables.

In terms of natural disasters, cable systems seem to not be dis­turbed compared to radio towers – that has been proven.

Also, more than 95 per cent of global telecommunications traffic goes through optical fibre.

That’s why FINTEL initially mooted this idea in the year 2000 when we had Southern Cross, which was going straight to Ha­waii.

All these Pacific Islands were relying on satellite, which is ex­pensive. So if you look at it now, I think by the year 2020, all Pacific Islands will be inter-connected on cable.

The main reason is because al­most all global traffic is on cable so everyone is moving in because of the bandwidth, the resilience it provides and more.

In terms of FINTEL, our role is to bring in the infrastructure and the global bandwidth.

Satellite cannot provide that at the moment. It’s all on fibre. So we (FINTEL) see that as our responsi­bility.

The international market is fully de-regulated, meaning any carrier can go international and bring in their own international and local staff; but so far everybody is just relying on FINTEL.

Now that we’re connecting all the Pacific Islands, our responsibility has become even greater.

Take for example the new Walesi TV app.

Government didn’t wait for local operators.

They’ve gone international and used Eutelsat, the European satel­lite operator.

The biggest risk for us is that Fiji is not fully redundant.

We need another station like this somewhere and that’s the way for­ward for us.

For Southern Cross, its end of life is 2030.

A Southern Cross NEXT is com­ing.

We’ve committed to that – that is US$20-25 million (FJ$42-52.5m) in­vestment.

It’s big and will last for 25 years.

We have to be committed to that. Southern Cross NEXT will land here and also in Savusavu.

That will give us the resilience.

If anything happens in Suva, we can go to Savusavu.

I think companies are also look­ing at putting a redundant fibre be­tween Viti Levu and Vanua Levu.

That’s the biggest challenge for us, plus the requirements of Fiji and the Pacific Islands, in terms of bandwidth.

Internet bandwidth globally in­creases twice every two years, and Fiji is facing the same.

And then you have all this new technology: you have artificial in­telligence, you have 5G that’s com­ing up.

The biggest thing after the in­ternet now will be the block chain technology.

That’s going to be huge, but that also needs bandwidth.

Our immediate goal right now is to get a secure redundant in­ternational access for Fiji and the Pacific Islands.

We are working very hard for that. The Pacific Islands has been very lucky in the sense that we haven’t had any outages or a break in the cable system here.

Nowadays, if email access drops at work, you get frustrated. And in the 2018/2019 National Budget, Government is now penalising tel­ecom carriers, at the moment its only mobile but if anything goes wrong they’ll turn to us.

So that’s in our immediate plans.

You look at Southern Cross NEXT, $US25m (FJ$52.67m) is a lot of money for us.

We are also securing our infra­structure, especially with the ad­vent of climate and have upgraded our facility as well.

A lot of our visitors are from out­side Fiji and so we want to create a good first impression with a good facility.

We need that, because in the Pa­cific Islands we are competing with the likes of Australia, New Zealand and the U.S.

We have to be at tier one level if we want to compete.

What is FINTEL’s role in relation to internet service providers like Vodafone, DIgicel and TFL?

Our main role is to provide that international access. Everything international is going through FINTEL.

We provide that access and the required data. Internet and data is such that every month our clients need an increased bandwidth.

So we have to make sure the re­quired bandwidth and access to content is there.

international bilateral relations.

That’s our main aim. We also compete with them, if they want wholesale internet or data we pro­vide that as well. Big competition.

What have been FINTEL’s priorities in recent years?

Fiji is no longer our main mar­ket. It’s a regional shift. Because all these companies are going in­ternational because the market is open.

They don’t have to use us; they can buy bandwidth from any­where.

But at the moment, we are patch­ing them through and our pricing is regulated by the Fijian Compe­tition and Consumer Commission (FCCC).

We are looking at the internet and data and we looking at putting a data centre here to cater for the Pacific Islands.

Through island connections, the likes of Digicel and Vodafone have made the hub of all their Pacific operations here.

Otherwise, we are wholesale deal­er and we have to look regional now to survive.

As you are aware, we are manag­ing the cable station in Savusavu for Government.

We will do it remotely and send people there monthly.

Then we can attract the Pacific Islands to come to us to access Southern Cross.

They are also looking at their own resilience.

Our retail side has diminished. Before, everything came through us and we controlled the voice, the data but now that has opened up.

What’s your sources of revenue?

For us, there are two main sourc­es of revenue. About 60 per cent is from internet and data.

So data is to the corporate’s list lines.

They would want a dedicated pipe. Institutions like banks would prefer everything to be on a dedi­cated pipe.

That for us is a way of growing our business.

Now with Ethernet technology, as soon as they want the bandwidth you can just open the pipe.

Pacific Islands are also buying in­ternet from us which is our growth area.

The other portion is the access to Southern Cross, which is regu­lated but carriers need bandwidth.

How has the revenue trend and profitability been in recent years?

The revenue trend has been inter­esting – a bit up and down.

FINTEL had exclusivity before and our revenue used to be close to $100m, but we are struggling to reach $15 or $20m today.

For us, the main risk in finance is the regulatory processes.

One change in the figure there and we struggle, and then slowly come up again.

That’s why we are flexible; we are always moving and looking for new products.

The regional islands, in terms of cable systems, are one of our key products.

Profitability in terms of whole­sale is not bad, either.

If you look at the ATH group as a whole, in our financial report that will come out after the annual general meeting, it’s not bad com­pared to global benchmarks.

What are some other major investments you are undertaking and at what cost?

The major one is the new data centre, that could cost around $5-10 million.

Then there’s Hawaiki for resil­ience.

We are looking at Savusavu as well but that will come as a cost as well, since Southern Cross NEXT will be our next international ac­cess.

And also, because our Vatuwaqa station is vulnerable we are look­ing at moving it uphill.

We got four cable systems at the moment, so to move up each sys­tem would cost around $10m.

So you can see why it would be better to put another landing, and leave this as is.

But if not, we will have to move this up.

We keep upgrading our environ­ment here.

The return on investment has also been encouraging.

That’s a question better answered by the board but so far things have been good.

ATH bought FINTEL for around $27m; six years down the line we’ve given back more than that.

That’s an indication of our re­turns.

Do you think there’s enough competition in the telecom market and is there room for more players?

I think at the moment, there is enough, especially in the mobile market.

We got Digicel, then Vodafone and of course not forgetting Inkk Mo­bile.

FINTEL actually applied for a mo­bile licence, because we were look­ing at other products to survive.

But with the group it made bet­ter sense for Vodafone to continue with that service.

That’s also why we’re having the proposed merger, to avoid the dual infrastructure and make business more seamless for our clients.

Globally that’s happening – you just talk to one company and they can connect you with everything else.

For our clients, they just have to talk to one company so business becomes seamless.

Pricing may also be reviewed, and may even come down.

Infrastructure could be share, there could only be only one inter­net service provide product.

If you look at the economy of scale, we are less than a million people so from a business perspec­tive, unless you bring in some­thing totally new and innovative, it doesn’t make sense for an addi­tional player.

It might be good for the consum­ers but for business, probably not.

Would you like to add anything further?

These are exciting times for FIN­TEL, we have oanly 35 people and are making profits.

Just last year, we paid out $15m in dividends.

So we are not bad, but the chal­lenges are always there, and we are very flexible with exploring new products.

Ultimately, the bottom line is to make our customers happy. I think the penalty in the National Budg­et is good and will keep everyone alert.

Telecom is a utility nowadays.

Feedback: sheldon.chanel@fijisun.com.fj

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