Denis O'Brien sells Digicel's telecoms business in the Pacific for €1.59bn

The deal is being largely funded by the Australian government and is seen as a way to contain China's rising influence in the region

Mon, 25 Oct, 2021 - 11:31

Alan Healy

Denis O'Brien's Digicel is to sell its mobile business in the Pacific region to Australian firm Telstra in a deal that values the company at $1.85bn (€1.59bn).

The deal is being largely funded by the Australian government and is seen as a way to contain China's rising influence in the region.

The government will front $1.33bn (€1.14bn) of the total value, with Telstra contributing the rest, the Australian telco and the government said in a statement.

Telstra first revealed in July the Australian government had approached it to help it buy the business.

Digicel, the Caribbean telco founded by O'Brien, is the largest mobile phone carrier in the Pacific, with operations in Papua New Guinea, Fiji, Samoa, Nauru Vanuatu, and Tonga — the most lucrative being those in Papua New Guinea (PNG).

In a statement, Mr O'Brien said the deal marks a successful realisation of a strategic investment following their entry in the South Pacific.

"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," he said.

Today’s announcement is a tremendous testament to our colleagues across Digicel Group and in particular, our 1,700 staff in the Pacific.

As part of the deal, Mr O'Brien will join the board of directors of the newly formed holding company for Digicel Pacific Ltd.

"Digicel Pacific is a commercially attractive asset and critical to telecommunications in the region," Telstra chief executive officer Andrew Penn said.

"The Australian government is strongly committed to supporting quality private sector investment infrastructure in the Pacific region."

Digicel last year denied an Australian newspaper report it was considering a sale of its Pacific business to state-owned China Mobile Ltd as the heavily indebted telco restructured its business.

A sale of Digicel to a Chinese company would have been a cause of concern for the Australian government, amid rising strategic competition between Washington allies and Beijing in the Pacific region.

"Given the proximity of the Pacific to Australia and given the geopolitical issues between Australia and China, the Australian government was quite concerned about the idea of a Chinese company owning a major telecommunications company in the Pacific," said Amanda Watson, a researcher from Australian National University's Department of Pacific Affairs.

Diplomatic relations between the two nations have deteriorated in recent years, with China imposing trade sanctions on produce from Australia and reacting angrily to its 5G ban sidelining telecoms giant Huawei.