US, Australia Block China’s Purchase of Pacific Mobile Phone Network
Australian and US officials have been in talks over Digicel’s situation since last year, when it emerged the phone company was under financial pressure from bondholders and may sell assets to a Chinese state-owned company such as China Mobile.
However, governments are uncertain of what legitimate interest China has in acquiring Digicel, and whether its Irish billionaire owner Denis O’Brien could exaggerate China’s interest to create bidding tension and maximize a selling price.
Telstra confirmed on Monday that she had been drafted by the government to potentially acquire a minority stake in the assets of Digicel’s mobile phone network in the Pacific, in a taxpayer-backed proposal estimated at around $ 2 billion for assets. Aging 3G and 4G in Papua New Guinea, Fiji, Tonga, Vanuatu, Nauru and Samoa.
Telstra may update the market with more information in its August 12 financial results.
In late 2019, executives from Telstra and Optus attended meetings in Washington with the U.S. government, think tanks, and the tech community to discuss how Western countries can develop 5G and future networks and avoid to use the Chinese telecommunications company Huawei.
Digicel is incorporated in the Bermuda tax haven and operates in 33 markets including Jamaica, Haiti, Trinidad and Tobago, Barbados, Cayman Islands, Panama and El Salvador.
Home Secretary Karen Andrews dodged questions about the government’s willingness to fund the Telstra purchase, but did confirm that the potential deal had national security implications.
“Although I understand your question, I am not ready to comment on any of these issues, especially because they concern our national security,” she said on Tuesday.
Concerns over Digicel’s assets in countries neighboring the United States that could be sold to a Chinese state-owned company arose in 2020 under the Trump administration, sources said.
Donald Trump’s then ambassador to Jamaica Donald Tapia said in January that Chinese spies had used Digicel’s network to eavesdrop on his calls. Digicel at the time dismissed the claims as “unfounded”, according to the Irish time.
The U.S. government’s interest in Digicel has passed on to the Biden administration, a source said.
At the G7 meeting in the UK in June, the world’s largest advanced economies announced a plan to challenge China’s funding of infrastructure projects in developing countries under the initiative. ” the Belt and Road “of Beijing.
President Biden touted the so-called Build Back Better World initiative to provide a transparent infrastructure partnership to help reduce the $ 40 trillion ($ 54.6 trillion) required by developing countries by 2035 .
“It’s not just about facing or facing China,” a senior official in the Biden administration reportedly said at the G7.
Hockey consultant for Digicel
âBut so far, we haven’t come up with a positive alternative that reflects our values, our standards and the way we do business.â
Mr. O’Brien flew his private jet to the United States last year.
Diplomatic sources said former Australian ambassador to Washington and former treasurer Joe Hockey helped organize Mr. O’Brien’s entry into the United States during border restrictions linked to COVID-19.
Mr. Hockey works as a consultant for Digicel and has privately warned interested parties that he has a patriotic interest in preventing China from buying Digicel’s assets in the Pacific.
The former treasurer recently returned to Sydney temporarily from his Washington home port for work and family reasons, a source said.
He declined to comment when contacted.
Amanda Watson, a researcher at Australian National University in the Department of Pacific Affairs, said Digicel’s global operations had “very significant” debt problems and had been forced to restructure their debt to retain bondholders.
âThe sale of the Digicel Pacific branch could be quite strategic as it is reasonably profitable and could help reduce debt,â she said.
“It’s definitely profitable in PNG.”
Digicel Pacific generated earnings before interest, taxes, depreciation and amortization (EBITDA) of US $ 235 million in 2020.
Any government financial support for a Digicel acquisition would likely be channeled through Export Finance Australia, government sources said.
Trade and Investment Minister Dan Tehan announced in June that the powers of the EFA would be extended to equity investments in offshore infrastructure under “certain circumstances” to act in the “national interest” from Australia.
The coalition government is spending nearly $ 100 million to fund two-thirds of a 4,700-kilometer submarine cable from Sydney to PNG and the Solomon Islands, to prevent Huawei from expanding in the Pacific and d ‘potentially spy on the area.
The Australia, United States and Japan Trilateral Partnership for Investment in Indo-Pacific Infrastructure announced last October $ 30 million in funding to finance an undersea fiber-optic cable to the Republic of Palau , an archipelago of over 500 islands, part of the Micronesia region. in the Western Pacific Ocean.
The branch cable will connect Palau to a new cable that will span the Indo-Pacific region from Singapore to the west coast of the United States.
âSecure and reliable internet connectivity in the region will open up opportunities to boost tourism, business and investment, and to provide better government services, including health and education,â the government said in October.
Australia is also supporting a scoping study for Timor-Leste’s first submarine fiber-optic cable, at the request of its government.