Undelivered contracts cost PNG billions
Partnership takes aim at better governance

Telstra visit signals Digicel deal is closer

Denis O'Brien
Digicel's Denis O'Brien - Australia's China troubles is the tycoon's get rid of debt card

BUSINESS DESK
| The Irish Times | Extract

DUBLIN - The downward spiral in relations between China and Australia in the past year has played into the hands of businessman Denis O’Brien as he looks to further reduce the debt burden of his Digicel telecoms group.

Early last year O’Brien effectively forced bondholders to write off $1.6 billion (K5.6 billion) of what they were owed.

Now he is looking at selling off the least-indebted part of the group: its Pacific business, spanning Papua New Guinea, Fiji, Samoa, Vanuatu Tonga and Nauru.

Just 150km separates the Australian and PNG mainlands. It’s only 4km if you consider their islands in the Torres Strait.

Talk last year of Chinese interest in Digicel Pacific was enough to goad the Australians into action and inject a bit of competitive tension into the process – underpinning the $2 billion (K7 billion) price tag being bandied about.

Relations between China and Australia hit a bump when in 2018, amid cybersecurity concerns, Australia banned Shenzhen-based Huawei from having any part in its 5G broadband network.

Then in May 2020, after Canberra called for an independent investigation into the initial outbreak of Covid-19 in Wuhan, this escalated into a full-on trade dispute – ultimately affecting Australian barley, beef, coal, wine and other exports.

It emerged two months ago that Australian telecoms group Telstra was in talks to buy Digicel Pacific, with financial backing from the Morrison government.

And it seems that things are progressing nicely, with the Australian Financial Review reporting last week that Telstra chief executive Andy Penn carried out a three-day visit to PNG last month to meet prime minster James Marape and long-time O’Brien associate Paul Connolly.

It seems a deal is likely before the end of the year which will lower Digicel’s net debt position from about $5.4 billion (K19 billion) currently and boost its equity value.

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

Philip Fitzpatrick

Thanks Mr Morrison on behalf of the O'Briens on my grandmother's side, the Aussie taxpayer dollars will come in handy.

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Working...
Your comment could not be posted. Error type:
Your comment has been saved. Comments are moderated and will not appear until approved by the author. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.

Working...

Post a comment

Comments are moderated, and will not appear until the author has approved them.

Your Information

(Name and email address are required. Email address will not be displayed with the comment.)