Australia’s Telstra has announced that it has completed the acquisition of Digicel Pacific, following receipt of all necessary government and regulatory approvals. In a press release confirming the development, the company noted that it had contributed USD270 million of equity to the USD1.6 billion purchase price, while the Australian Government, through Export Finance Australia, provided the remaining USD1.33 billion via ‘a combination of non-recourse debt facilities and equity like securities’.
In a stock exchange announcement, Telstra CEO Andrew Penn confirmed that Digicel Pacific will operate as a standalone business overseen by Telstra International, saying: ‘We are very pleased the deal has completed and we welcome Digicel Pacific to the Telstra family … We have been working closely with Pacific Governments on this acquisition and we’d like to thank them for their cooperation and support. We look forward to continuing to work with them as we operate Digicel Pacific and strengthen our relationships in the region.’
Digicel Pacific offers communications services across Fiji, Nauru, Papua New Guinea, Samoa, Tonga and Vanuatu, with Telstra reporting that the company had around 2.8 million subscriptions and generated service revenues of USD466 million in the financial year ended 31 March 2022. Meanwhile, Telstra said it expects Digicel Pacific depreciation and amortisation, including purchase price amortisation arising from the transaction, of around USD160 million per annum.
Of note, Telstra also confirmed a development relating to the disputed ‘Additional Company Tax’ introduced in Papua New Guinea earlier this year, which had threatened to derail its Digicel Pacific acquisition. According to the company’s stock exchange filing ‘the vendor has made arrangements to resolve the matter with the PNG tax authorities … Telstra is not part of this process, and the outcomes of this process are a matter for the vendor’.
Confirming details of this development, in its own press release confirming completion of the sale of Digicel Pacific, Digicel Group revealed that the Independent State of Papua New Guinea had agreed to enter into a binding international arbitration process to resolve the disputed one-time PGK350 million (USD99.4 million) tax and to waive a further PGK50 million sought in respect of non-payment of the tax to date. As part of this process, Digicel confirmed that USD99.4 million had been placed in escrow on closing pending the outcome of the arbitration which will take place in Singapore.