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(AUSTRALIA) TELSTRA REPORT: Government and telecoms giant Telstra are buying a Pacific telecoms company in a joint venture to block China #AceNewsDesk report

#AceNewsReport – Oct.26: Digicel Pacific employs 1,700 people across Papua New Guinea, Fiji, Samoa, Vanuatu and Tahiti: The company’s future has been the focus of speculation for months: According to Telstra, the Australian government approached it “to provide technical advice in relation to Digicel Pacific” which is “critical to telecommunications in the region”: The government then agreed to finance the bulk of the bid, Telstra said.

#AceDailyNews according to BBC Australia Report: Digicel Pacific: Australia’s Telstra called the A$2.1bn ($1.6bn; £1.2bn) deal a “unique and very attractive commercial opportunity to boost our presence in the region”.Last year Digicel denied a report that it was in talks to sell its Pacific arm to state-owned China Mobile. this move is being viewed as a political block to China’s influence in the region.

Telstra logo
Telstra is Australia’s largest telecoms company

Telstra to buy Pacific arm of telecommunications giant Digicel with Canberra’s support amid China’s rising influence according to ABC News

A man walks past a Telstra shop in Darwin, he looks down at his phone.
The Telstra acquisition ensures Digicel Pacific stays out of China’s hands. (ABC News: Michael Franchi)

Telstra and the Australian government have finalised a deal to buy and operate the largest telecommunications company in the Pacific, in a move largely seen as an effort to counter China’s influence in the region.

The $2.1 billion deal to acquire and run Digicel Pacific is being funded largely by the government, which will provide $1.9 billion toward the acquisition.

Telstra said it would contribute $360 million and own 100 per cent of the company’s ordinary equity.

The deal, which is expected to be completed within the next six months, is “consistent with Australia’s longstanding commitment to growing quality investment in regional infrastructure,” the Department of Foreign Affairs and Trade said in a statement.

“Telstra’s acquisition sends an important signal about the company’s potential and about wider business confidence in the future of the Pacific region.”

Digicel, founded by Irish billionaire Denis O’Brien, is the largest mobile phone carrier in the Pacific with operations in Papua New Guinea, Fiji, Samoa, Vanuatu, Tonga and Nauru.

The company makes more than $300 million a year in profit.

Telstra chief executive Andy Penn said that there would be no sweeping changes to the way Digicel operated in the Pacific.

A close-up of a man with grey hair as he speaks
Andy Penn says Australia has a keen interest in investing in the Pacific.(AAP: James Ross)

“We are not looking to change the business model in any material way,” he told the ABC.

“Obviously, as time goes by plans change in design and people will want more data. We’ll be looking at providing expertise and advice on how to do that.

“But no plans to change the brand, no plans to change the business model, no plans to change the team in any material way.” 

He suggested that Telstra would focus on boosting mobile and internet infrastructure in the Pacific.

Telstra edges out China Mobile

The talks followed reports that China Mobile, the biggest telecoms operator in China, had shown interest in buying the Pacific arm of telecommunications giant: The deal comes after several months of discussions between Telstra and the government over the strategic asset.

Mr Penn also would not be drawn on whether the federal government offered a substantial package to Telstra because it wanted to make sure the company was not snapped up by a Chinese state-owned enterprise, saying that “wasn’t a matter” for the company.

“Clearly Australia has a keen interest in the Pacific region and provides finance … to large businesses like Telstra interested in investing in the region, and really that’s the origins of this transaction,” he said.

Trade Minister Dan Tehan also brushed off questions about China, saying the government was intent on encouraging better infrastructure in the region.

“The thing that was in the forefront of the government’s mind is that we continue to see quality investment in the Pacific. That’s what drove the government’s decision making,” he said.

Telstra said it was initially approached by the Australian government to provide technical advice in relation to Digicel Pacific and subsequently considered acquiring the business with its financial and strategic risk management support.

Stopping Digicel Pacific from ending up in the hands of a Chinese company has been seen almost as strategically important as stopping Huawei from getting a hold in Australia’s 5G network.

Play Video. Duration: 4 minutes 59 seconds
Breaking down the federal government’s decision to buy Digicel Pacific

“Australian officials were concerned about whether a Chinese company or potentially a Chinese state-owned entity might look to buy Digicel’s Pacific arm and there were some geopolitical and geostrategic concerns about a Chinese company owning a major telecommunication company in the Pacific region, which is of course so close to Australia,” said Amanda Watson, an expert in Pacific communications at the Australian National University.

That’s especially since Digicel Pacific uses a 4,700km undersea cable from Sydney that was largely funded by the Australian government in 2018 in an effort to prevent PNG and the Solomon Islands from contracting Huawei for the project.

Concerns over potential reputational damage

Martin Waieng, a medical student in PNG’s capital of Port Moresby, said he felt locals would be supportive of Australia’s investment in the region, saying there was trust in the Telstra brand.

“I’m quite relieved that it’s Telstra taking over and not a Chinese company taking over,” he said.

Dr Watson said retaining local employees would be crucial to a successful takeover of the company.

“There would be people who are very familiar with the operating environment in their particular small Pacific island nation or their particular province or region of Papua New Guinea.”

Nevertheless, there remained some risk of reputational damage for Australia, she said.

“Depending on what happens with services and pricing and so on, it could be damaging for Australia’s reputation and relationship with the Pacific or it might be positive.

“If, for instance, there is a situation where a cyclone takes out the telecommunication network in a large area of a Pacific island and it takes days or weeks for that to be repaired … I certainly think there’s some risk for the Australian government and its diplomatic relationships with the Pacific, as well as for the Telstra company itself.”

Strategic move

Analysts say the company would otherwise be attractive to China as it seeks to assert greater authority in the region.

“Digicel is the primary player in the Pacific and Australia sees it as a strategic asset that they can’t allow to fall into the hands of China,” said Jonathan Pryke of the Lowy Institute, a Sydney-based think tank.

“They are keen to get Australian business back into the Pacific and they’ve come to the realisation that they are going to have to underwrite.”

A spokesman for Australia’s Department of Foreign Affairs and Trade told newswire Reuters: “Partnering on infrastructure development is a key part of our Pacific step-up.”Australia and China are big trading partners but have disagreed on a number of important political issues

Amid escalating tensions with China, Australia has ramped up its presence in the Pacific. 

This includes allocating $1.5bn to investment in infrastructure projects in the region as well as joining the Quad group, with the US, India and Japan, and the Aukus security pact, with the US and UK.

It also largely funded a 4,700km (2,900-mile) Coral Sea cable in 2018 to prevent Chinese telecoms company Huawei Technologies from laying it.

It is also now helping to finance an undersea optic fibre cable for Palau. 

Chinese control of telecommunications networks has long been a concern for Washington and its allies. 

This has led many countries to ban Huawei and other Chinese companies from supplying phone lines and 5G networks, including the US, UK and Australia.

#AceNewsDesk report ………….Published: Oct.26: 2021:

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