JAMAICA-based telecoms provider Digicel has found a buyer for its Pacific operations, which it has been trying to offload in order to pay off its multi-billion-dollar debt to bondholders.
Australian telecoms giant Telstra Corp yesterday confirmed that it is currently locked in talks with Digicel to buy its Pacific operations in partnership with the Australian Government. The pacific operations of Digicel comprise its businesses in Papua New Guinea, Fiji, Samoa, Vanuatu and Tahiti, where it is the biggest mobile carrier in these pacific states.
Reuters reports that the Australian Government’s involvement in the purchase is being widely seen as a move to block China’s influence in the region. Last year Digicel denied an Australian newspaper report it was considering a sale of its Pacific business to State-owned China Mobile Ltd.
Sale to China would be cause for concern
A sale of Digicel Pacific to a Chinese company would be a cause of concern for the Australian Government amid strategic competition between US allies and China in the Pacific region. Telstra is quoted as saying the Australian Government would finance the bulk of any bid for Digicel’s Pacific operations. Telstra did not provide financial details but The Independent newspaper in Ireland yesterday quoted the The Sydney Morning Herald as saying more than AU$1.5b (€939m) in Australian taxpayers’ money could be used to help Telstra buy Digicel. It has been reported that the sale would see Telstra pay between AU$200m and AU$300m for the Digicel Pacific assets.
Telstra reported, however, that discussions are incomplete. “There is no certainty that a transaction will proceed,” the company said in a statement. The Australian telecoms group said it 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”.
The Independent newspaper in Ireland indicated that Telstra has asked Digicel’s founder, Irish billionaire Denis O’Brien, to sit on the board of the company, and for revenue forecasts to be underwritten for three years as part of the terms of the deal.