Global Markets

Telstra and Australian government taking shape, a deal for Digicel’s Pacific operations.

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Telstra (OTC: TLSYY) Corp Ltd is nearing completion of a deal to buy Digicel Group’s Pacific assets in collaboration with the Australian government, two persons’ familiar with the offer told Reuters on Thursday.

Telstra announced in July that it was in talks to buy the Pacific firm, with Australia contributing the majority of the financing – a strategy largely perceived as a political attempt to counter China’s power in the region. “It is fairly imminent.

I can’t put a timetable on it but the deal is almost done,” said an Australian government source. The sources declined to be named as they are not authorised to talk about the deal. Digicel, founded by Irish billionaire Denis O’Brien, is the Pacific’s largest mobile phone service, with operations in Papua New Guinea, Fiji, Samoa, Vanuatu, and Tahiti, with Papua New Guinea being the most profitable.

According to Australian Broadcaster Nine Entertainment, Telstra will spend between A$200 million and A$300 million of its own money, with the government contributing A$1.5 billion ($1.1 billion). A spokesman for Telstra declined to comment.

Telstra CEO Andrew Penn told investors last month that any investment would most likely be in the “low hundreds of millions.” Last year, Digicel denied to an Australian publication that it was considering selling its Pacific business to state- owned China Mobile (NYSE: CHL) Ltd.

A sale to a Chinese corporation would be a source of concern for the Australian government, given the Pacific region’s strategic struggle between US allies and China. Australia has increased its presence in the Pacific by establishing a A$2 billion ($1.5 billion) infrastructure financing facility and by joining the Quad group, which includes the United States, India, and Japan, in order to offset China’s growing interests in the Indo-Pacific.

Story by : Norvisi Mawunyegah