Australian telecom giant Telstra announced on Monday that it is currently in talks to acquire Jamaican telco Digicel’s operations in the South Pacific for a rumored bid of $1.5 billion, various media reports highlighted.
The Australian offer has been backed up from the government which will support the acquisition not only financially but also in terms of strategic risk management.
“If Telstra were to proceed with a transaction it would be with financial and strategic risk management support from the government,” a spokesperson of the telco told reporters.
Telstra described any equity investment it would make as “a minor portion of the overall transaction,” suggesting that the government will foot most of the bill.
As for Digicel Group, which has been sinking under the weight of around $5.4 billion gross debt, such a transaction would be a major boost, allowing the company to focus on their remaining 26 markets across the Caribbean, Central America, and Asia Pacific regions.
“The discussions are incomplete and there is no certainty that a transaction will proceed,” said Telstra, responding to numerous media inquiries.
In parallel, experts consider this new offer as a political block to China’s influence in the region. As the national security committee of federal cabinet has reportedly considered the potential implications of the company being sold to a Chinese entity.
China Mobile, for example, has also been rumored to be in talks with Digicel.
Security experts fear the mobile phone networks could be used to spy on Australia’s nearest neighbors, access sensitive data, and disrupt activities.
However, concerns have also been raised that the company could be using China as a scapegoat to extract money from Australian taxpayers.
It is worth mentioning that Digitel Pacific, owned by Irish entrepreneur Denis O’Brien, hired Citigroup, American multinational investment bank and financial services corporation, last year to advise on a possible sale of the Pacific portfolio, which covers Papua New Guinea, Fiji, Samoa, Vanuatu, Tonga, and Nauru.