Australia’s Telstra completes Digicel Pacific buyout

There had been speculation that Chinese firms are interested in buying Digicel, a cause of concern for Australia.

People use Digicel wireless phones in downtown Port-au-Prince, Haiti
Digicel is the largest mobile phone operator in the Pacific and any Chinese interest in it would be a cause for concern for Australia [File: Eduardo Munoz/Reuters]

Telecommunications company Telstra Corp Ltd on Thursday said it had completed the acquisition of Digicel Pacific, backed by funding from the Australian government, after a tax dispute between Papua New Guinea (PNG) and Digicel threatened to stall the sale process.

Digicel in April said it was considering legal options after PNG imposed a tax of almost $100m that the Jamaica-headquartered telecom firm said could affect the planned $1.6bn sale of its Pacific operations to Telstra.

“With respect to the Papua New Guinea additional company tax, (Digicel) has made arrangements to resolve the matter with the PNG tax authorities,” Telstra said in a statement. “Telstra is not part of this process, and the outcomes of this process are a matter for (Digicel).”

Digicel and the office of PNG Prime Minister James Marape did not immediately respond to a request seeking comment.

Telstra in October 2021 agreed to buy the Pacific operations of Digicel, with the Australian government providing $1.33bn and Telstra contributing $270m.

Digicel, founded by Irish billionaire Denis O’Brien, is the largest mobile phone carrier in the Pacific, with about 2.8 million subscribers and has operations in countries including Fiji, Samoa and Vanuatu – the most lucrative being those in PNG.

Australian Foreign Minister Penny Wong said her government’s support for the deal “reflects our commitment to help build a stronger Pacific family through investment in high-quality infrastructure.”

Before the deal was announced, there was speculation in the market and media about Chinese companies interested in making a bid, which would have been a cause of concern for Australia amid rising competition between ally the United States and China in the Pacific.

The announcement by Telstra comes as leaders of the Pacific countries meet in Fiji for a four-day summit where climate change and tensions between Washington and Beijing have dominated meetings.

China is looking to forge greater ties across the region, proposing a broader trade and security deal with 10 Pacific nations that recognise Beijing, but which is opposed by some nations.

Source: Reuters