Today we announced exciting news of our partnership with the Australian government to acquire Digicel Pacific, the largest mobile operator in the South Pacific region.
Australia has deep personal, historical and cultural ties to the Pacific, forged over decades of sustained engagement, and Telstra, through our international team, has been doing business there for decades.
In fact, our mobile network in the Torres Strait Islands is located just off the coast of Papua New Guinea, Digicel Pacific’s largest market.
This is a unique and very attractive business opportunity for Telstra to strengthen our presence in the region.
With 1,700 employees and approximately 2.5 million subscribers, from individuals to large corporations, Digicel Pacific is the number one telecommunications operator in Papua New Guinea, Nauru, Samoa, Tonga and Vanuatu, and the number two in Fiji. The business generated EBITDA of $ 233 million for the year ended March 31, 2021 with a relatively high EBITDA margin of 54%.
Beyond economics, this acquisition also makes sense for a number of reasons.
Strong alignment with our main assets
Telstra has decades of experience providing international connectivity in the Pacific. In fact, we are one of the largest providers of voice and data services connecting the South Pacific to the rest of the world through our Southern Cross submarine cable.
Telstra has also been a licensed operator in Papua New Guinea since 2012 and we already provide connectivity and technology services there to a number of large companies.
And of course, we are very experienced in providing and operating mobile networks that cover some of Australia’s most remote areas, from the coast to the outback and the Torres Strait Islands.
Partnership with the government
The Australian government is strongly committed to supporting quality investment in private sector infrastructure in the Pacific region and we have already worked with them on the Coral Seas cable that connects Papua New Guinea, the Solomon Islands and the Australia.
For Digicel Pacific, Telstra will contribute US $ 270 million, and the government, through Export Finance Australia, will contribute US $ 1.33 billion to the purchase price of US $ 1.6 billion. The government will also provide us with strategic risk management support. Telstra will own 100 percent of the common shares.
Achieve our growth ambitions
Upon termination of the agreement, Digicel Pacific will be managed as a separate business within our international division, which will include maintaining separate P&L and IT systems.
We will also maintain the same Digicel brand that its customers in the Pacific region know and love, and the Digicel Pacific management team will continue the day-to-day management of the business.
During our recent launch of Strategy T25, we announced that the ambition of our international business is to generate profitable growth and value by leveraging the growing strategic importance of our international network – today’s announcement hui represents an important initiative in achieving this ambition.
Extension of the Telstra family
Telstra and Digicel Pacific have many things in common, including the purpose and values of our company – what we stand for and the impact we have on our local communities.
Digicel Pacific has made significant investments in community development programs in Papua New Guinea, Fiji, Nauru, Samoa, Tonga and Vanuatu. Like the incredible work done by our Telstra Foundation, this is an important activity that we are committed to continuing.
We look forward to welcoming Digicel Pacific to the Telstra family.