Telstra Corp Ltd (TLS.AX) says it was in discussions to buy the Pacific operations of telecom company Digicel Group, with the support of the Australian government, which will likely fund the majority of the deal amount.
The Sydney Morning Herald has reported that the deal could be worth AUD$2 billion (US$1.48 billion), with the Australian government paying around AUD$1.5 billion (US$1.1 billion).
Telstra said it was approached by the government to provide technical advice initially on Digicel Pacific, which is “critical to telecommunications in the region.”
The company added that if the deal were to go through, it would be with “significant” government funding and support, while Telstra’s contribution will form a “minor portion”.
“The discussions are incomplete and there is no certainty that a transaction will proceed,” Telstra added.
Australia’s Minister for International Development and the Pacific, Zed Seselja was reluctant to confirm the reports that government could sink $1.5 billion into a deal, today telling Pacific Islands journalists, “the government is not buying Digicel Pacific with Telstra. I should make that clear. The Australian government is working with Telstra to explore the feasibility of Telstra acquiring Digicel Pacific.”
Seselja said Australia has a very strong interest in supporting secure and resilient critical infrastructure in Australia and the broader Indo-Pacific region, but that “whether any transaction proceeds will ultimately be a matter for commercial parties.”
Digicel Pacific provides telecom services in Papua New Guinea, Fiji, Nauru, Samoa, Tonga and Vanuatu,
Its regional operations generated core earnings of US$235 million in 2020 with strong margins, the company said.
