BY Fraser Tennant
In a strategic move in the South Pacific, Australian telecommunications company Telstra Corporation is to buy the Pacific arm of fellow telecoms giant Digicel Group Holdings Limited (DGHL) in a transaction valued at $1.6bn.
Under the terms of the agreement, Telstra and the Australian government will acquire Digicel Pacific – a joint venture that many view as a political block to China's influence in the region. The deal involves Telstra contributing $270m, with the government providing the bulk of the financing with $1.33bn.
Headquartered in Papua New Guinea, Digicel is the biggest telecommunications business in the South Pacific. It also operates across Vanuatu, Nauru, Samoa, Tonga and Fiji, with 2.5 million mobile phone and internet subscribers and 1700 employees.
Upon completion, Digicel will have no operational responsibility for the Pacific operations, though customary transition services will be provided by DGHL for a limited period. Furthermore, there will be no change to the Digicel brand in the six markets in which it operates, and the current DPL management team will continue to lead the business.
"This announcement is a tremendous testament to our colleagues across Digicel Group and in particular, our 1700 staff in the Pacific,” said Denis O’Brien, founder and chairman of Digicel. “In 2006, we established a business in the South Pacific region that has helped democratise mobile communications and transform local economies and societies by making affordable best-in-class communications available to more than 10 million people across six of the most exciting markets in the South Pacific region.
"I am very pleased that today's agreement with Telstra, our very near neighbour in the Pacific, will further enhance DPL’s infrastructure, data and call termination links with one of the largest and most reliable networks in Australia,” he continued. “I thank all of our colleagues in the South Pacific and beyond who have made today possible, and I remain committed to ensuring a successful transition in my ongoing role as a director of the newly formed holding company.”
The transaction, which remains subject to customary government and regulatory approvals, is expected to complete in the first quarter of 2022.
Mr O’Brien concluded: “From a Digicel perspective, this transaction is a very successful realisation of a strategic investment following our entry in the South Pacific in 2006.”
News: Telstra to buy Digicel Pacific in Australia government-backed $1.6 bln deal