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Telstra and the Australian Government have partnered together to buy Digicel Pacific, the leading telecoms group in the South Pacific region.
Through Export Finance Australia, the Australian Government will pay most of the $2.1 billion purchase price of the South Pacific mobile and broadband company.
While Telstra will add in $362 million for Digicel Pacific, the Australian Government will provide $1.7 billion through a combination of debt and other securities.
In a joint statement, Foreign Minister Marise Payne, Trade Minister Dan Tehan and International Development and Pacific Minister Zed Seselja said that there was an expected 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.
Chinese operators such as China Mobile also expressed interest in the business started by Irish billionaire Denis O’Brien, who will sit on the new board.
“It’s a tribute to Australia’s commitment to the Pacific,” said Senator James Paterson.
“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.”
Upon the completion of the acquisition by mid-next year, Telstra will be owning 100 per cent of Digicel Pacific.
Chief executive Andy Penn said the company considered acquiring Digicel Pacific after being approached by the Australian 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.
Digicel Pacific is part of the Digicel Group, which provided mobile and broadband services in the Caribbean in the 2000s before expanding to the Pacific.
Currently, Digicel Pacific operates in Papua New Guinea, Tonga, Fiji, Nauru, Samoa and Vanuatu with about 2.5 million subscribers and 1700 employees.
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 joined deal is expected to be wrapped up in the next three to six months.
This article was first published on Public Spectrum
Eliza Sayon is an experienced writer who specialises in corporate and government communications. She is the content producer for Public Spectrum, an online knowledge-based platform for and about the Australian public sector.
