Telstra, in partnership with the Australian government, reached a deal to acquire the Digicel business in the South Pacific region for US$1.6 billion, plus up to an additional US$250 million subject to business performance over the next three years.
The Digicel business will be owned and operated by Telstra. Telstra is contributing US$270 million of equity to the US$1.6 billion purchase price and the Australian Government, through Export Finance Australia, is providing the remaining US$1.33 billion through a combination of non-recourse debt facilities and equity like securities. Telstra will own 100 per cent of the ordinary equity.
Digicel currently operates in six markets in the South Pacific including Papua New Guinea, Fiji, Samoa, Vanuatu, Tonga and Nauru. It recorded sales of approximately US$450 million and adjusted EBITDA of approximately US$222 million in the year ended March 31, 2021. Following the sale, Digicel, which is privately owned by Irish businessman Denis O’Brien, will focus on the 26 Caribbean & Latin American markets where it also operates.
“Digicel Pacific is a commercially attractive asset and critical to telecommunications in the region. The Australian Government is strongly committed to supporting quality private sector investment infrastructure in the Pacific region. We previously said that if Telstra were to proceed with a transaction it would be with financial and strategic risk management support from the Government. We also said that in addition to a 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. I am pleased that we have been able to achieve both of those outcomes,” said Andrew Penn, CEO of Telstra.
“Digicel enjoys a strong market position in the South Pacific region holding a strong number one position in all markets other than Fiji where it is the number two. The combined business generated EBITDA of US$233 million for the financial year ended 31 March 2021, with a strong margin. Digicel Pacific has already invested significant capital in PNG, which is its largest market, to achieve extensive network coverage including 4G to 55 per cent of the population. The medium to long-term capex to sales is expected to be around 15 per cent,” said Mr Penn.
Commenting, Denis O’Brien, Digicel Founder and Chairman said: “Today’s announcement is a tremendous testament to our colleagues across Digicel Group and in particular, our 1,700 staff in the Pacific. In 2006, we established a business in the South Pacific region that has helped democratise mobile communications and transform local economies and societies by making affordable best-in-class communications available to more than 10 million people across six of the most exciting markets in the South Pacific region. I am very pleased that today’s agreement with Telstra, our very near neighbour in the Pacific, will further enhance DPL’s infrastructure, data and call termination links with one of the largest and most reliable networks in Australia. I thank all of our colleagues in the South Pacific and beyond who have made today possible and I remain committed to ensuring a successful transition in my ongoing role as a director of the newly formed holding company for DPL.
https://www.digicelgroup.com/en/news.html
