Telstra completes multi-billion dollar Digicel deal, widely seen as a bid to counter China’s rising regional influence
The deal, widely seen as a bid to counter China’s rising regional influence, was threatened by a so-called telco ‘super tax’.
Telstra has completed its acquisition of Digicel Pacific and has received all necessary government and regulatory approvals for the $US1.6bn ($2.4bn) deal, in what as been widely viewed as a political move to counter the rising regional influence of China.
The acquisition of Digicel Pacific was announced in October with Telstra contributing $US270m of equity and the Australian government, through Export Finance Australia, providing the remaining $US1.33bn through a combination of non-recourse debt facilities and equity-like securities.
Telstra chief executive Andrew Penn said Digicel Pacific will be operated by Telstra International, headed by Oliver Camplin-Warner, as a stand-alone business.
“We are very pleased the deal has completed and we welcome Digicel Pacific to the Telstra family,” Mr Penn said on Thursday.
“We have been working closely with Pacific governments on this acquisition and we’d like to thank them for their co-operation and support. We look forward to continuing to work with them as we operate Digicel Pacific and strengthen our relationships in the region.”
Digicel Pacific will be overseen by a Telstra-controlled board, chaired by Telstra Enterprise group executive David Burns.
The acquisition comes amid a period of intense political interest in the Pacific. The US this week announced more funding for fisheries, extra aid, and offers of new US embassies in the Pacific, as it jockeys for influence alongside China.
Digicel is the largest mobile phone carrier in the Pacific and operates 3G and 4G networks across PNG, Fiji, Samoa, Vanuatu and Tahiti with about 2.5 million subscribers.
The deal had been threatened by a new $US100m ($133m) super tax in Papua New Guinea. PNG’s parliament in April passed an amendment to the country’s tax act, creating new tax of for telcos that have a market share of more than 50.1 per cent – a tax that would only affect the Jamaica-headquartered Digicel.
A Telstra spokesman said the tax issue had been resolved but did not disclose whether the telco would be paying the tax.
“The vendor has made arrangements to resolve the matter with the PNG tax authorities. Telstra is not part of this process, and the outcomes of this process are a matter for the vendor.”
Foreign affairs minister Penny Wong said in a statement: “The Australian government’s support for this transaction reflects our commitment to help build a stronger Pacific family through investment in high-quality infrastructure.
“Telecommunications and digital access are critical to sustainable economic growth and development outcomes into the future.”
Don Farrell, minister for trade and tourism, said the acquisition’s closure “marks a significant milestone in Australia’s economic engagement with our Pacific family.
“This transaction sends a positive signal of business confidence in the Pacific region, and we hope it will encourage further investment in the region from top tier Australian companies.”
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