Australian telco Telstra has partnered with the Australian government in a $1.6 billion deal to buy the South Pacific operations of Digicel in a deal that would prevent a key part of the region’s telecommunications infrastructure falling into Chinese hands.
Telstra, the nation’s largest telco, said in a statement on Monday it would contribute $270 million to the deal and hold 100% of the equity in Digicel Pacific.
The terms of the sale were agreed on and would be completed within six months, Telstra chief executive Andrew Penn said.
“Digicel Pacific is a commercially attractive asset and critical to telecommunications in the region,” Penn said.
Digicel is owned by Irish businessman Denis O’Brien, is incorporated in Bermuda and is headquartered in Jamaica It operates in 33 markets around the world.
It is the leading mobile phone carrier in Papua New Guinea, Tahiti, Tonga, Nauru, Samoa and Vanuatu. It is the second biggest carrier in Fiji after Vodafone.
Trade and Investment Minister Dan Tehan said in a statement the partnership with Telstra, once a state-owned monopoly, was “consistent with Australia’s longstanding commitment to growing quality investment in regional infrastructure.”
The deal also reflected Australia’s commitment to support the development of secure and reliable infrastructure in the region, which is critical to the region’s economic growth and development, Tehan said.
The U.S. and some other governments have sought to minimize involvement of Chinese telecoms equipment makers in upgrades of communications networks, citing security concerns. Added to that, trade and other relations between Australia and China have been strained over a range of issues in the past several years.
Damien Kingsbury, a Deakin University expert on international politics, said Australia regards the South Pacific as its “backyard” and would not have wanted a Chinese company owning Digicel’s operations in the region.
“There is a very high level of background concern about China’s movement in the Pacific and elsewhere,” Kingsbury said. “There is a desire to try to neutralize China’s movements into the region.”
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