Telstra has agreed to buy the largest telco in the Pacific using $1.8billion of taxpayer cash to prevent it being owned by China.
The $2.1billion sale of Digicel Pacific – which operates in Papua New Guinea, Tonga, Fiji, Nauru, Samoa and Vanuatu – will go through next year.
Most of the cost is being covered by the Government through Export Finance Australia with Telstra tipping in the rest.
Telstra has agreed to buy the largest telco in the Pacific using $1.8billion of taxpayer cash to prevent it being owned by China. Pictured: Scott Morrison on Monday
State-owned China Mobile had expressed interest in buying Digicel but the Australian Government did not want the strategic asset to fall into the hands of the Chinese Communist Party.
In a joint statement, Foreign Minister Marise Payne, Trade Minister Dan Tehan and International Development and Pacific Minister Zed Seselja said the Government expects to see a long term return from the deal.
‘The acquisition also reflects the government’s commitment… to support the development of secure and reliable infrastructure in the region,’ the ministers said on Monday.
Irish billionaire Denis O’Brien, who started the business, will sit on the company’s new board.
‘It’s a tribute to Australia’s commitment to the Pacific,’ said Senator James Paterson, who also chairs a parliamentary intelligence and security committee.
‘One of the key things about this agreement is that it demonstrates that Australia does so for the benefit of our friends and family in the Pacific, and unlike some other operators in the Pacific, we do so without any strings attached.’
State-owned China Mobile had expressed interest in buying Digicel but the Australian Government did not want the strategic asset to fall into the hands of the Chinese Communist Party. Pictured: Chinese troops in Mongolia in 2017
Telstra will control 100 per cent of Digicel Pacific upon the completion of the acquisition by mid-next year.
The Government hopes to make a return on its portion of the financing in the event of any future sale.
Chief executive Andy Penn said Telstra had considered acquiring the business after first being approached by the Government last year to provide technical advice.
‘We previously said that if Telstra were to proceed with a transaction it would be with financial and strategic risk management support from the government,’ he said in a statement on Monday.
Digicel Pacific is part of the Digicel Group, which began providing mobile and broadband services in the Caribbean in the 2000s before expanding to the Pacific.
Digicel Pacific operates has about 2.5million subscribers and 1700 employees.
One of the partners in its Pacific operations is Huawei, the Chinese firm banned from participating in Australia’s 5G network infrastructure in 2018.
Mr Penn acknowledged that partnership on Monday but said he didn’t anticipate any regulatory issues in the Pacific markets, with the company to focus on 4G for now.
‘We will work with our local team on the network plan, taking into account our partnerships… there are no issues in the short to near term in relation to that,’ he said in a conference call.
Pacific Telecommunications Council Vice President Paul McCann said Telstra’s move into the region had been a long time coming.
‘Telstra is inheriting a network that will bring great benefit to the Pacific,’ he said.
The deal is expected to be wrapped up in the next three to six months.
Telstra will control 100 per cent of Digicel Pacific upon the completion of the acquisition by mid-next year
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