Andreas IsmarAustralia’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
The difference between stocks and CFDs
The main difference between CFD trading and stock trading is that you don’t own the underlying stock when you trade on an individual stock CFD.
With CFDs, you never actually buy or sell the underlying asset that you’ve chosen to trade. You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional stock trading you enter a contract to exchange the legal ownership of the individual shares for money, and you own this equity.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional stock trading, you buy the shares for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks.
CFDs attract overnight costs to hold the trades, (unless you use 1-1 leverage) which makes them more suited to short-term trading opportunities. Stocks are more normally bought and held for longer. You might also pay a stockbroker commission or fees when buying and selling stocks.
