Australia’s Telstra to acquire Digicel Pacific for $1.6bn
02:10, 25 October 2021
Australia’s telecommunication firm Telstra will acquire Digicel Pacific for $1.6bn, the leading mobile phone provider in Papua New Guinea, Samoa, Vanuatu, Tonga, Nauru, and Fiji.
The value of the deal, which will see Telstra hold 100% of Digicel Pacific, may increase to $1.85bn subject to business performance over the next three years, the company said in an exchange filing.
Digicel has 2.5 million subscribers across six nations in the South Pacific, 83% of which are located in Papua New Guinea. In the year ending March, Papua New Guinea accounted for 79% of $233m earnings before interest, taxes, depreciation and amortisation.
Financial backing from Aussie government
Telstra received strong financial backing from the Australian government for the acquisition, securing $1.33bn debt facilities and equity-like securities from Export Finance Australia. That leaves Telstra only needing to set aside $270m upfront for the deal.
“Digicel Pacific is a commercially attractive asset and critical to telecommunications in the region,” Telstra CEO Andrew Penn said. “Digicel enjoys a strong market position in the South Pacific region holding a strong number one position in all markets other than Fiji where it is the number two.”
Following the announcement, shares in Telstra rose 2.4% at AUD3.82 on the Australian bourse. The deal is expected to conclude in three to six months.
Read more: Shares of Australia’s Telstra rise on 5G expansion plan
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