Australia aims to stymie China with $US1.6bn telecoms purchase in the Pacific

Australia is to buy the mobile phone networks of Fiji, Papua New Guinea, Nauru, Samoa, Tonga and Vanuatu from Digicel Group based in Jamaica. Telstra Corp, the country’s biggest telecom operator, will pay $US1.6 billion for the deal backed by $US1.3 billion from the Government’s export finance agency.

Commentators describe this as a significant strategic move to block another potential buyer – China.  Three years ago, Canberra announced it would build an undersea high-speed internet cable to the Solomon Islands, shutting out China’s Huawei Technologies Co. from the project. Australia had earlier banned Huawei from involvement in its own 5G mobile network.

The purchase sits alongside underwater cables Australia has with its Pacific partners.

The Wall Street Journal quotes John Lee, a senior fellow at the United States Studies Centre at the University of Sydney, saying,

“It’s ensuring that a potential adversarial power doesn’t own infrastructure which would impact on not just Australia’s communications capabilities, but also its military capabilities. Underwater warfare is increasingly important and these cables are directly relevant to that.”

Australia has been raising its profile in the Pacific and investing more in a region dominated since World War II by the U.S. and its allies but increasingly courted by China. Three years ago, Australia said it would offer Pacific Island nations more than $2 billion for infrastructure projects while bolstering military cooperation.

The WSJ says the Australian government’s spending on the purchase is larger than its annual aid budget for Papua New Guinea and the Pacific, estimated at $A1.44 billion for the 12 months through to next June. This suggests the transaction was driven by geostrategic concerns and a desire to build the presence of Australian businesses in the Pacific, said Jonathan Pryke, Pacific Islands director at the Lowy Institute in Sydney.

Australia’s Department of Foreign Affairs and Trade says funding for the deal was part of the government’s Pacific Step Up initiative, designed to develop secure and reliable infrastructure in the region. The government-owned Export Finance Australia will help to manage financial and other risks associated with the acquisition.

Telstra’s acquisition sends an important signal about the company’s potential and about wider business confidence in the future of the Pacific region, the department says in a statement.

The Digicel brand will remain, and current staff kept on.

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