Money
Major Australian telco launches attack on China
Telstra has confirmed that it’s talking to the Australian government about a joint bid which would block China from buying Digicel
Reports suggest that Telstra is in talks with the Australian government to snatch Digicel from China.
Digicel operates relatively old 3G and 4G LTE mobile networks in the South Pacific. National security officials in Canberra are concerned China could buy its networks to spy on Australia’s surrounding neighbours.
If China was to access the sensitive data, it could potentially disrupt activity in Papua New Guinea, Fiji, Tonga, Vanuatu, Samoa, Nauru and Samoa.
The telco also confirmed media reports of the joint offer in a statement to the ASX:
“Telstra has confirmed it has been in discussions regarding a potential transaction to acquire telecommunications company, Digicel Pacific in the South Pacific region in partnership with the Australian Government”.
The company said that should they proceed, the acquisition would come with risk management support from the Australian Government.
“Telstra was initially approached by the Australian Government… In addition to a significant Government funding and support package, any investment would also have to be within certain financial parameters with Telstra’s equity investment being the minor portion of the overall transaction”.
The Morrison government wants to block any Chinese acquisition of Digicel Pacific. This is because it fears Beijing could use Digicel’s mobile tower network to conduct espionage on Australia’s neighbours.
Telstra has asked Digicel’s billionaire Irish owner Denis O’Brien to sit on the board of the company. O’Brien will assist underwriting Digicel’s revenue forecasts for three years.
These reports claim Telstra would pay between $200 and $300 million for the assets. The Morrison government would pay the remaining costs of the $2 billion bid.
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