Telstra confirms talks over government-backed buyout of South Pacific telco Digicel
Telstra says any purchase of Digicel’s Pacific assets would be backed by a ‘significant government funding and support package’.
Telstra has confirmed talks are on foot to buy Digicel Pacific from Irish billionaire Denis O’Brien, one of the world’s richest people, with a “significant” funding contribution from the federal government part of the possible deal.
The national telco on Monday told the ASX that it had been in discussions regarding buying the company, which operates across the South Pacific region.
Sources have told The Australian that the possible deal is unambiguously political, and designed to stop any potential purchase by Chinese interests.
Mr O’Brien, Digicel’s owner and founder, was listed by Forbes last year as Ireland’s wealthiest Irish-born citizen, worth $US6.8bn.
Mr O’Brien has held interests in large telecommunications and media outfits such as independent News and Media in Ireland, and in 2001 founded Digicel which operates in 33 markets in the Caribbean, Central America and the Asia Pacific.
Telstra said Digicel Pacific “was founded in 2006 by Denis O’Brien, an Irish entrepreneur, and is a leading provider of communications services across Papua New Guinea, Fiji, Nauru, Samoa, Tonga and Vanuatu.
“Digicel Pacific enjoys a strong market position in the South Pacific region generating EBITDA of $US235 million in calendar 2020 with a strong margin, as well as extensive network coverage.’’
The company said the discussions were incomplete at this stage.
“Telstra has confirmed it has been in discussions regarding a potential transaction to acquire telecommunications company, Digicel Pacific in the South Pacific region in partnership with the Australian Government,’’ the company said in a statement.
“The discussions are incomplete and there is no certainty that a transaction will proceed.
“Telstra was initially approached by the Australian government to provide technical advice in relation to Digicel Pacific which is a commercially attractive asset and critical to telecommunications in the region.
“If Telstra were to proceed with a transaction it would be with financial and strategic risk management support from the Government.
“In addition to a significant government funding and support package any investment would also have to be within certain financial parameters with Telstra’s equity investment being the minor portion of the overall transaction.”
Telstra shares were 16c lower at $3.75 around midday on Monday.
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