Government to take over telecommunications [1]
Monday, May 31, 1999 - 09:00. Updated on Friday, January 8, 2016 - 13:20.
From Matangi Tonga Magazine Vol. 14, no. 2, May 1999.
After 21 years of connecting Tonga to the rest of the world, Cable and Wireless plc, which has the exclusive right for Tonga’s international telephone connection will cease its service in July 2000, when the company’s Franchise Agreement with the Government of Tonga expires.
To ascertain that there will be no disruption to Tonga’s telecommunication service the Tonga government has decided to form a new Tonga Communications Corporation, to take over the running of the international service from Cable and Wireless plc and the domestic telephone services from the Tonga Telecommunication Commission.
Busby Kautoke, the acting general manager of Tonga Telecom, said that initially the TCC would be 100 per cent owned by the Tonga government. However, while maintaining a majority ownership of TCC government would sell some shares to a new investor, preferably, “an investor who is an owner and an operator of communications networks, and has experience in small to medium size markets.” Busby said that 10 per cent of shares in the TCC may be purchased by Tongans in Tonga and overseas.
Shares
Whether the government would like to sell shares to either one or two foreign investors, Busby said would be clarified once a Bill for a Communications Act and a Bill for a Tonga Communications Corporation Act were passed by Parliament during its 1999 session. These Bills would also clear the way for the establishment of the Tonga Communications Corporation and the Department of Communications. The department will take over all the regulatory tasks concerning telecommunications, broadcasting and satellites, from the Tonga Telecommunication Commission.
Busby said that when the TCC takes over the international telephone services it would like to continue to employ Cable and Wireless staff, “and Cable and Wireless can also bid to buy some shares in the TCC,” he said.
Jon Morris, the General Manager of Cable and Wireless said that they had been informed that government would terminate the Franchise Agreement in July next year, “but we will be requested to become part of a new Corporation, and we are still waiting to hear from them.”
Jon said that Cable and Wireless had about $10 million worth of assets in Tonga, including unpaid debts from Tonga Telecom. He personally believed that the best thing to do was for TCC and Cable and Wireless to sit down and discuss the possibility of exchanging $10 million worth of assets for some shares in the TCC, “without having to exchange any cash. It makes more sense to do it that way, rather than the corporation selling shares to a new foreign partner, and then to pay us $10 million.”
Jon said that Tonga needed an overseas partner, someone who knows the international scene. “Cable and Wireless is a big company and we know the international market, and we know Tonga too, and I just hope that government will make the right move because there is a lot of scope for the development of telecommunications in this country.”
Jon said that the speed for the transference of data through electronic mail and the need for a better telephone connection overseas means a bigger bandwidth is required on satellite. “That is very expensive, but the alternative is an underwater fibre optic cable, which we just can’t afford to bring to Tonga because of our very small market. But maybe it is something that Tonga could get cheaply through Tongasat if a satellite can be positioned in one of their orbital slots over the Pacific.”
Jon said that a lot of money can be made in telecommunications for Tonga, and that Cable and Wireless was paying government about $6 million per annum, being $2 million in company tax and the rest in royalty fees. “But it could be more if Tonga Telecom had installed the 2,000 telephones for applicants who are still waiting,” he said.