Telstra and the Australian govt. buy Digicel’s Pacific holdings to block China

• The move is another sign of Australia’s desire to adopt an aggressive stance against  Chinese expansion in the area, despite China being one of Australia’s big trading partners
• Digicel has a number of far-flung telecoms networks specialising in mobile and entertainment services

Australia’s Telstra and the Australian government are buying Digicel’s Pacific network which employs 1,700  people and operates across the island countries of Papua New Guinea, Fiji, Samoa, Vanuatu and Tahiti. 

The motivation for Australia is predominantly to block the Chinese from doing the same and therefore increasing its influence in the Pacific region. 

Australia has recently decided to go ‘all in’ with the US on an Asia-Pacific strategy to counter the regional influence of China. It joined the Quad group along with the US, India and Japan which, at this stage, is described as an informal strategic forum which discusses and comes to agreement on a disparate range of strategic issues, mostly framed as a block on China’s regional strategy. Issues have so far included climate change, Myanmar and ensuring  equitable access to Covid vaccines.

Australia also last month signed the Aukus security pact with the US and UK to help Australia  acquire nuclear-powered submarines (a move which infuriated the French government when the French understood that they had a deal to supply Australia with the same).  

Digicel Pacific is an international mobile phone network and home entertainment provider operating in over 33 markets across the Caribbean, Central America, and Oceania regions.

Telstra says the deal between itself and the Australian government regarding Digicel began as a request from Canberra to provide technical advice about Digicel Pacific. How stable, profitable and critical was it for the health and political stability of the region? At that stage Digicel had been the subject of a report that it was in talks to sell its Pacific arm to China Mobile, something it denied. 

Then the talks with the Australian government swung around to the possibility of making a joint US$1.6bn /£1.2bn bid for Digicel, the bulk of which would be financed by the government. That appears to be an attractive offer on a commercial basis that Telstra couldn’t refuse. 

As far as Digicel itself is concerned, according to Denis O'Brien, Founder and Chairman of the company, talking with CNBC, Digicel had been approached  with a number of unsolicited offers for the business over the last year or so, and it decided now was a good time for it to sell at a good price. (see Digicel's press release on the sale to Telstra)