The government will provide almost $2 billion to help fund the acquisition of South Pacific telco Digicel by Australia’s Telstra. The deal will help boost the company’s presence in the region.
Telstra will retain a majority stake in the newly formed entity after agreeing to sell its US$1.6 billion share sale.
The sale of the business, which has around 800,000 customers, is expected to close in the first half of 2019.
While Telstra touted the asset as a commercially attractive asset, some industry insiders questioned the government’s motives for pushing the sale of the business.
Sources told Reuters that China Mobile was not close to buying the assets of Digicel, but the government believed that it would have been beneficial for Telstra to acquire the assets.
William Stoltz, a security expert from Australia, said that despite the government’s decision to block a proposed bid by China for the telecommunications company, it was still not clear exactly how the government would react if it ever received a bid from Beijing.
Dr Stolz said that Australia would have to make more decisions in the future if security and economic considerations are not balanced.
The Pacific island nations need wealthier states to improve their infrastructure and modernise their economies in order to be more prosperous and stable.
Despite the concerns raised by the government and Telstra, the companies believe that they will not have to rip up the 4G networks that were placed by Huawei.
The Board of directors of Telstra Corporation Ltd has approved the company’s acquisition of Hutchison Telecommunications Australia Ltd. Hutchison Telecommunications Australia’s board has also approved the transaction.
The company will contribute $US270 million of its own equity and the Australian Government will provide the remaining $US1.33 billion.
The three ministers said they were pleased with the progress made by Digicel Pacific in the region.
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