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Digicel Pacific takeover talks could wrap next month

Digicel Fiji

Takeover talks for Digicel Pacific operations by Australian telecoms giant Telstra could be wrapped up as soon as next month.

News out of Australia is that the parties are now in the final stages of Telstra’s US$2-billion acquisition of Digicel Pacific operation, which includes Fiji. It has been widely reported that the Australian Government could be pumping as much as US$1.5 billion to assist Telstra in acquiring the Digicel operation in Fiji, Papua New Guinea, Samoa, Vanuatu and Tahiti.

A Telstra outlet in Australia (Photo: Asha Barbaschow/ZDNet)

This is a move widely viewed as a political block to China’s influence in the region, as earlier it was reported that China Mobile was interested in buying out Digicel Pacific and a sale of Digicel to a Chinese company would be a cause of concern for the Australian Government amid strategic competition between its American allies and China in the Pacific region.

Digicel Pacific is the least-indebted part of the wider group, which is based in Kingston, Jamaica. The telecoms giant, which is the biggest mobile carrier in these Pacific states, has been trying to offload its Pacific operations in an effort to pay off its multi-billion-dollar debt to bondholders.

The Digicel global headquarters in Kingston, Jamaica. (File photo)

Informed sources say Digicel Pacific could have Telstra as its new owners as early as next month. In July, Telstra had confirmed it was in talks to buy the Pacific operations of Digicel Group in partnership with the Australian Government.

Last month the Jamaica Observer reported that Telstra is demanding that certain financial parameters be met before the company purchases Digicel’s Pacific unit, which it described as “a commercially attractive asset”.

At that time, Telstra’s chief executive Andrew Penn maintained that the deal is not yet guaranteed disclosing that Telstra will only make the acquisition if it yields adequate financial returns for its shareholders.

CEO of Telstra Andrew Penn (File photo)

It is apparent that Telstra is now satisfied of the financial viability of Digicel Pacific and the deal has moved much further to the extent that signing is now on the horizon.

Telstra has reportedly 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.