Telstra announced yesterday it has teamed up with the Australian government to acquire the assets of Digicel Pacific for $1.6 billion. Industry analysts see this as a strategy by the government to keep Chinese telecom providers from establishing a foothold, according to Mobile World Live. Primary funding for the acquisition, $1.3 billion, is coming from Export Finance Australia, a government run enterprise, with Telstra contributing $270 million.
Telstra will operate the business and own 100 percent of its equity. The company said it expects the deal to be completed in three to six months. Established in 2006, Digicel Pacific operates in Papua New Guinea, Fiji, Nauru, Samoa, Tonga and Vanuatu, serving 2.5 million subscribers with the main concentration residing in New Guinea. If it hits performance marks over the next three years, Digicel Group could get an additional $250 million.
CEO of Telstra, Andrew Penn, said conditions included both financial risk and strategic management support from the government, which was willing to take a minority position in the deal within certain financial parameters. “I am pleased we have been able to achieve both of those,” Penn said.
An Australian government spokesman said the arrangement is to “support the development of secure and reliable infrastructure in the region, which is critical to the Pacific region’s economic growth and development.”
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