Alfred Sasako and Robert Matau


In Solomon Islands, its final battle in 2009 belonged to the growing, lucrative mobile telephone business. A hitherto unknown player was picked by the Solomon Islands Government over two others, including Digicel, the waking global giant in the business. It was truly a David-Goliath dual.
bemobile came out of the blue and struck the knockout blow. It will operate Solomon Islands’ second mobile network, breaking the monopoly held by Our Telekom, the nation’s provider of fixed land and mobile networks for more three decades.
At a brief ceremony in Honiara on December 17, Prime Minister Derek Sikua presented bemobile’s Chief Executive Officer, Julien Coustaury, the licence.
But the company’s victory which has attracted negative comments in local newspapers could be short-lived.
Within 48 hours of receiving the 15-year licence, senior government officials revealed that bemobile had failed to lodge an application for a business licence with the country’s Foreign Investment Board [FIB].
All new businesses are required by law to register their company by applying for a business licence before they are allowed to do any business in the Solomons.
“Business registration is a pre-requisite. It is a legal requirement. Any foreign company wanting to conduct any type of business in Solomon Islands must first register with the Foreign Investment Board,” one official told the nation’s daily, Solomon Star newspaper.
“Even now, there’s no record it has applied for a licence, unlike Digicel which has done so.
“Under the law, the licence given to bemobile is worthless because it has not done the registration,” one official familiar with FIB application processes said.
“Government should not use the FIB as a convenient rubber stamp, the official said.
“The law is there to guide our conduct and the government being at the forefront of leading the way should conduct its affairs within the bounds of the law. Exceptions should never be allowed.”
bemobile currently provides mobile telecom services in Papua New Guinea. It is supported by its shareholder, US fund GEMS, as well as Trilogy International Partners.
Trilogy International Partners has mobile telecom operations in Bolivia, Dominican Republic, Haiti and New Zealand, and recently received the 2009 Award for Corporate Excellence from United States Secretary of State, Hillary Clinton.
bemobile’s shareholding arrangement is similar to Our Telekom’s shareholding arrangement.  Superannuation funds NASFUND, Nambawan Super and the PNG Development Programme Ltd hold 15% in the bemobile venture. Telikom PNG Ltd holds a 50% stake in the company, while GEMS and Trilogy International Partners hold the remaining 35%.
It is not clear whether the business licence requirement was an oversight or was being ignored by the Telecommunication Evaluation Committee, headed by former American Peace Corps worker, Mike Hemmer. Hemmer is the Chief Executive Officer of Pacific Oil, the main supplier of fuel and other petroleum products in Solomon Islands.
Pacific Oil replaces Shell and is a subsidiary of the nation’s National Provident Fund, which bought Shell about two years ago.
How bemobile was picked ahead of others, including Digicel, the growing global mobile telephone provider, which has expanding operations in the Caribbean, Europe and the Pacific, surprised local pundits.
In the Pacific, Digicel is rapidly gaining market shares in the mobile telephone operations in Fiji, Papua New Guinea, Vanuatu, Samoa, Tonga and Nauru.
In PNG, the company has claimed about 80 percent coverage nationwide within 18 months of operation. An estimated 3 million Papua New Guinean customers—half the nation’s population—are on the Digicel network.
Critics have launched their own cynicism about the government’s choice and made known their feelings in the local newspapers.
Some have written to the local newspapers asking how the government came up with the choice.
One writer, John Sau, was pretty hard hitting in his letter published in the Solomon Star newspaper on December 18, the day after bemobile was granted the licence.
 “The decision by the Evaluation Committee headed by Mike Hemmer and the Solomon Islands Government to award the telecommunications licence to bemobile defines what the Sikua Government is all about—corruption,” Sau wrote.
“It is so obvious the decision was indeed a corrupt one that involves manipulation and under-the-table dealing,” he said.
The issue of conflict of interest, he said, was never properly addressed when the government appointed Hemmer to head the Telecommunications Evaluation Committee. Hemmer is employed by NPF, the majority shareholder of Our Telekom, to lead the evaluation team.
“This is not proper and only indicates the level of corruption and loopholes that led to the distorted decision made. Hemmer (Mike), your team has denied this country a golden opportunity.
“Digicel has revolutionised and delivered proven high quality mobile service in the Pacific. [By comparison], bemobile is a tiny company and will not provide competition, they have no track record nor the financial capacity to provide any better than [Our] Telekom,” Sau said.
 “With this in mind and in the name of competition, the Prime Minister has been blindfolded to protect Our Telekom’s interest in the communications industry.
“The public therefore must demand a Commission of Inquiry into the evaluation process, how it was conducted, the methodology used and all the selection criteria to demonstrate that a level playing field had been used.
“It must be pointed out that the role played by Our Telekom in this whole saga needs to be investigated,” Sau said.
Defending the decision, PM Sikua said the committee received submissions from three applicants—bemobile, Digicel and Milestone Developments (a Canadian group with a focus on development).
“Of these applications, bemobile and Digicel were the serious ones,” he said.
The Evaluation Committee and its advisers “assessed these rigorously”.
Dr Sikua said the committee engaged a team of lawyers from international firms in New York, Geneva and Singapore “to ensure the process is managed to the highest level of international standards. And it was”, he said.
He said the committee made its assessment based on:
• Applicant’s experience and track records in other countries;
• Their commitments regarding the type, quality and geographical coverage of their services;
• The financial security they were prepared to put up to guarantee these commitments;
• Their ability to finance the investment; and
• The radio frequencies they required.
What stood out in the end against Digicel’s case, according to Matthew Hodges Kopa, a member of the evaluation committee, was bemobile’s extent of coverage commitments, financial performance guarantees and requests for fiscal concessions.
One senior minister told friends that Digicel was never considered because it decided to withdraw from the race.
Apart from a US$10 million [about SB$80 million] performance bond, which bemobile stands to lose if it does not meet its coverage target beginning on Guadalcanal and Malaita and followed by other provinces, little is known about how much bemobile is investing in the project.
bemobile CEO Coustaury said the cost of the initial roll-out service would be in the vicinity of SB$80 million.
 “We should see the benefits after the second quarter of 2010,” the Frenchman said at the brief ceremony in Honiara.
“I want to say that we won’t let the people of Solomon Islands down with our service,” he said.
Perhaps one of the reasons for bemobile’s obscurity is its smallness.
bemobile will offer mobile services and international long distance calls within six months starting in Guadalcanal and Malaita provinces, and quickly expand to Makira, Tulagi, Isabel, Central, Choiseul and Renbel.
“bemobile intends to revolutionise the telecommunications market in the Solomon Islands by bringing the “best quality at the best price,” said Coustaury.
Digicel’s Public Relations executive for the Pacific, John Cochrane, said the company respected the Solomon Islands Government’s decision but was naturally unhappy about it.
“We understand the Solomons Islands market better as we had done a bit of research about it too,” Cochrane said.
“Our record in the Pacific speaks for itself as well. We feel we could have provided what people would have wanted in terms of innovative and affordable mobile services.”
However, he said this would not be their last attempt as ”Digicel Pacific will also consider any further decisions and will certainly consider them.”

Box   1

WHAT BEMOBILE LICENCE ENTAILS

The 15-year licence will require it to provide coverage to an increasing percentage of the Solomon Islands population. It must launch operation within six months and reach 81% of the population within 21 months of the issuance of the licence. It has secured its coverage obligations with a US$10 million performance bond which will be released in phases as it meets interim coverage requirements.