Leadership, work culture issues to be sorted out

Sam Vulum
Despite ongoing problems, government-owned sole telecommunication provider, Telikom PNG, declared an after-tax profit of K51.8 million last year. And it is looking at achieving the same feat this year.

The profit excluded its sister company, Pacific Mobile Communications, which is responsible for mobile services in the country.

Telikom PNG also reported that it has a balance sheet that can comfortably take on substantial debts in the range of K100 to K150 million in new borrowings to fund an upgrade.

These were contained in a brief released to the business community in December to advise of the board's efforts in sorting out the mess created by the failed privatisation moves, constant changing of board members and management executives and industrial threats by workers.

Board director, Rod Mitchell, who prepared the brief, said the board was now working to resolve governance issues and building better frameworks for decision-making.

“But in the scheme of things, any organisation worth its salt should have those governance matters firmly sorted out. We are getting there but not fully there yet.

“And this is another reason why KPMG International is so important in this project as they are facilitating this governance change through the strengthening of the committee and the adaptation of best practice governance culture to the board and management of Telikom.

“The major issues as we see it in Telikom's restoration are failing work culture, lack of leadership and an urgent need to upgrade telecommunication platforms,” Mitchell said.

He said one area that is of paramount importance to overcome is in building a corporate and productive output.

There is a lack of leadership and managerial capability at senior level and a lack of understanding of the situation Telikom is in by staff and management.

“This is compounded by the fact that the average age of a Telikom employee is 42 years and that there has been no influx of graduate staff in over five years.

“Similarly, many of the trained staff-service linesmen, for example-are underpaid and lack the basic resources to carry out their roles, including vehicles, tools and petrol.

“This is exacerbated, we believe, by a number of rackets operating with external suppliers.

“It has become apparent that one of the major problems in dealing with reputable international firms and suppliers has been the credibility problem that Telikom has created over many years.

“Telikom personnel have made undeliverable commitments and sought kickbacks in their dealings with some very major companies abroad. And speaking frankly, there has been a reluctance on behalf of these firms to want to re-establish relationships with Telikom PNG,” Mitchell said.

He said a previous lack of focus, cultural malaise and maladministration has now led to “what we estimate to be approximately 30 illegal VSAT operators in the country”.

“This, we believe will resolve itself over the next 12 to 18 months as we roll out the legal VSAT programme. We anticipate that operators will in the not-too- distant future opt rationally for legal telecommunications over their existing arrangements.

“We will also through an executive search find a new CEO, most likely with international experience, perhaps from overseas. The appointment of the new CEO will be important in the reform at Telikom as well as addressing maladministration and appalling focus,” Mitchell said.

“As businesspeople, we end to gravitate to one solution when we have a major service delivery problem, and that is bringing in the “free market” and as the textbook says, 'the invisible hand will then go about and do its magic'.

“Following that, equilibrium returns to the market. While we might like to chant that mantra, I have to say I am not convinced that such a simplistic solution will be our panacea.

“Why competition will not solve the problem entirely, is that the very nature of competitive conduct is about focusing on areas that will deliver the greatest profitability for the least amount of capital expanded.

“That means major towns will see forms of competitive conduct, but new entrants will not solve the problem of bringing telecommunication services to outlying and remote areas-where is their reward to do it?

“Similarly, new entrants will not necessarily be focused on the household. There are far greater rewards in supplying telecommunications to large businesshouses.

“What does that mean? Telikom is potentially vulnerable to being stripped of its major source of income in a competitive environment.

“Another argument is that we should allow another mobile operator to compete in the market to widen penetration and allow satellite to deal with coverage.

“The answer to this is it is not immediately possible. Why? Because even with satellites, you need base stations for mobile to operate. And each base station only gives a 3.5-kilometre radius for mobile coverage.

“This leads to the crux of the matter-all new entrants will need Telikom and I think we need to repeat this mantra-all new entrants will need Telikom.”

Mitchell said Telikom has a K355 million capital expenditure programme that includes a major upgrade of its platform and a new undersea fibre optic cable between PNG and Australia, customer service centre, upgraded service delivery, new billing system, international roaming, VSAT implementation, expanded broad band, partnerships with customers and suppliers, restructure and new culture, merger of Pacific Mobile and Telikom, regulatory review/ tariff review, and the appointment of a new CEO and the management team.

“Similarly, we need to sort out the complex relationships between ICCC, Telikom and Pangtel, including service costs and delineation of roles.

“We also need to develop a workable community service obligation to ensure we reach out beyond major hubs with service delivery. There's so much to do in such a very short time,” Mitchell said.