Digicel has offloaded its Digicel Pacific Ltd arm to Australian telecommunications company Telstra in a deal, first announced last October, that values the subsidiary at up to $1.85bn.
Telstra completed the deal with finance from the Australian government through Export Finance Austalia, and the transaction will comprise of an initial $1.6bn payment and an earn-out of up to $250m over three years if the business achieves certain financial goals.
The Denis O'Brien-founded company said it expects a maximum payment of $50m during the first earn-out period based on service revenue performance for the year ended 31 March, 2022.
The transaction value is approximately 8.3 times Digicel Pacific's adjusted annual earnings before interest, tax, depreciation and amortisation of approximately US$222m in its most recent financial year.
Digicel Pacific has around 2.5m customers and employs 1,700 people in Papua New Guinea, Fiji, Samoa, Vanuatu, Tonga and Nauru. There will be no change to the Digicel brand in those markets and the management team will remain in place.
In Association with
"Having established our Pacific operations as a business start-up in 2005, we depart with enormous pride in a team that has made affordable best-in-class communications available to more than 10m people across six of the most exciting economies in the region," O'Brien said.
"I am deeply grateful to all our colleagues who contributed to this success and in particular, to our 1,700 staff in the Pacific who I know will continue to represent the Digicel brand with pride under new owners Telstra. We wish them every continued success for the future”.
Oliver Coughlan, group chief executive of Digicel, commented: "Until 2020 I was privileged to serve as CEO of our Digicel Pacific operations over many years and to work with exceptional people at this highly performing, high growth business.
"They retain our appreciation and friendship. Post this transaction, Digicel is well positioned to support continuing growth in our well-invested networks in our 25 markets in the Caribbean and Central America.”
Papua New Guinea has also agreed to enter into a binding international arbitration process to resolve a disputed exit tax payment of around $99.4m and to waive a $14.2m charge sought in respect of non-payment of the tax.
The $99.4m has been placed in escrow on closing pending the outcome of the arbitration which will take place in Singapore.
Digicel provides LTE and fibre networks as well as streaming services in 25 markets across the Caribbean and Central America, and the company employs some 5,300 people.
(Pic: Ken Cedeno/Digital/Corbis via Getty Images)
