Digicel has agreed to sell its Pacific operations to Australia’s Telstra Corporation for c.US$1.85 billion, in a deal largely funded by the Australian government.

The transaction, which is subject to government and regulatory approvals, is expected to complete in the first quarter of 2022.

Digital Pacific Ltd employs 1,700 people and operates in six markets in the South Pacific, namely Papua New Guinea, Fiji, Samoa, Vanuatu, Tonga and Nauru. Total subscribers amount to c.2.5 million.

The company recorded sales of c.$450m in the year to March 2021, with adjusted Ebitda in the period of c.$220m.

Denis O’Brien (pictured), Digicel founder and chairman, commented: “From a Digicel perspective, today marks a very successful realisation of a strategic investment following our entry in the South Pacific in 2006.

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“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 remain committed to ensuring a successful transition in my ongoing role as a director of the newly formed holding company for DPL.”

The Australian government is contributing AUS$1.9bn  towards the acquisition cost, with Telstra contributing AUS$360m. China Mobile, the biggest telecoms operator in China, had also shown interest in buying Digicels Pacific's assets.

Australia’s trade Minister Dan Tehan commented: "The thing that was in the forefront of the government's mind is that we continue to see quality investment in the Pacific. That's what drove the government's decision making."

Digicel Pacific uses a 4,700km undersea cable from Sydney that was largely funded by the Australian government in 2018.