Australian Telstra Corp Ltd has agreed to buy the Pacific operations of Denis O’Brien’s telecom firm Digicel Group in a US$1.6 billion (FJ$3.31 bn) deal largely funded by the Australian government and seen as a way to block China’s rising influence in the region.

The government will front US$1.33 billion of the total value, with Telstra contributing the rest, the Australian telco and a government statement said.

Cause Of Concern
With China building its influence in the region, and months of market and media speculation surrounding Digicel’s future, Telstra said the Australian government approached it to help it buy the business.

A sale of Digicel to a Chinese company would be a cause of concern for the Australian government.

“The acquisition also reflects the government’s commitment, as part of its Pacific Step Up, to support the development of secure and reliable infrastructure in the region, which is critical to the Pacific region’s economic growth and development,” a joint statement by several government ministers said.

Telstra will fully own and operate Digicel’s Pacific operations, it said.

Digicel, founded by Mr O’Brien, is the largest mobile phone carrier in the Pacific, with operations in Papua New Guinea, Fiji, Samoa, Vanuatu and Tahiti – the most lucrative being those in Papua New Guinea.

The deal includes a US$250 million (FJ$518.55m) earn-out clause, subject to the performance of the business unit over three years, that could increase the overall value of the deal, Digicel said in a statement.

The transaction, subject to various government and regulatory approvals, is expected to take up to six months to complete, according to Telstra and Digicel.

Commenting on the deal, Mr O’Brien said, “I am very pleased that today’s agreement with Telstra, our very near neighbour in the Pacific, will further enhance DPL’s (Digicel Pacific Limited’s) infrastructure, data and call termination links with one of the largest and most reliable networks in Australia. . .

“I remain committed to ensuring a successful transition in my ongoing role as a director of the newly formed holding company for DPL.

“From a Digicel perspective, today marks a very successful realisation of a strategic investment following our entry in the South Pacific in 2006”.

What Vodafone Fiji Chief Commercial Officer, Ronald Prasad Said:
We’ve always been ready.

I think we have operated in a competitive market for the last 12 years.

From a preparedness point of view Vodafone has always been ready.

And to us I don’t think it’s going to be any different, we have our plans and strategies in place to ensure we remain the number one provider in Fiji.

Feedback: maraia.vula@fijisun.com.fj