Telstra has confirmed it is in discussions to buy Digicel Pacific in partnership with the federal government, in a potential deal understood to be worth almost $2 billion and which would seek to block a possible bid by China to acquire the mobile network assets, after The Australian Financial Review revealed the approach last week.

Digicel operates relatively old 3G and 4G LTE mobile networks in the South Pacific, and national security officials in Canberra are concerned China could buy its networks to spy on Australia’s closest geographical neighbours, access sensitive data and disrupt activity in Papua New Guinea, Fiji, Tonga, Vanuatu, Samoa, Nauru and Samoa.