Telstra has confirmed that it is in talks with the Federal government on a joint bid for some key telco assets in the South Pacific.
The talks could see the bid emerge to frustrate an attempt by China to snatch the mobile phone assets of Digicell.
Telstra confirmed media reports of the joint offer in a statement to the ASX on Monday morning.
“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 in the ASX statement.
“The discussions are incomplete and there is no certainty that a transaction will proceed.
“Telstra was initially approached by the Australian Government to provide technical advice in relation to Digicel Pacific which is a commercially attractive asset and critical to telecommunications in the region. If Telstra were to proceed with a transaction it would be with financial and strategic risk management support from the 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,” Telstra said.
Telstra has asked Digicel’s billionaire Irish owner Denis O’Brien to sit on the board of the company and for future revenue forecasts to be underwritten for three years as part of the $2 billion bid, according to media reports.
The reports claim Telstra would pay between $200 and $300 million for the assets, while the Morrison government would pay the rest.
However, Mr O’Brien may walk away from the offer, the sources said, because he is frustrated by the conditions that Telstra requested on Thursday, media reports claimed.
Under the government’s proposal, the export credit agency, Export Finance Australia, would provide the money to top up the Telstra deal, the media reports said.
Digicel Pacific was founded in 2006 by Denis O’Brien and is a leading provider of communications services across Papua New Guinea, Fiji, Nauru, Samoa, Tonga and Vanuatu.
“Digicel Pacific enjoys a strong market position in the South Pacific region generating EBITDA of $US235 million in calendar 2020 with a strong margin, as well as extensive network coverage,” Telstra said on Monday.
