Australia is funding the potential purchase of a Pacific telco for only one reason, to ensure China Mobile doesn’t get to it first.
Remember that TikTok deal involving Oracle and Walmart under President Trump? The one that had Oracle purchasing the social network’s US operations and flinging money into an education fund because Trump demanded a payment to the government? It’s probably best the deal fell through, but it now appears Australia also wants a crack at showing the world how to keep companies out of Chinese ownership. If we rewind to 2018, Australia used around AU$200 million of its foreign aid budget to lock Huawei out of building a subsea cable to the Solomon Islands and Papua New Guinea. Instead of Huawei, local telco Vocus eventually picked up a AU$137 million contract to build the cable. That might work for one-off projects, but for the Pacific arm of bankrupt telco Digicel — that is reportedly swimming in around $7 billion of debt with yearly revenue of $2.3 billion — which China Mobile is said to be circling, another model would be needed. Enter Australia’s largest telco Telstra, who confirmed last week it was approached by the Australian government regarding a Digicel deal, with the government set to stump up «significant funding» for any transaction. Rather than the Trumpian demand for an upfront payment, Canberra has spun it around and decided it needs to put its money where its increasingly large mouth is. While Telstra was mute on the details, the ABC put the deal at around AU$2 billion, including Canberra lending Telstra AU$1.5 billion at reduced rates that would net Australia about AU$30 million annually in interest. Digicel Pacific has networks in Papua New Guinea, Fiji, Nauru, Samoa, Tonga, and Vanuatu.
