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Telstra, the Australian telecommunications company, has agreed to buy Digicel’s Pacific operations in a largely Australian government-funded deal that values ​​the company’s equity at $ 1.6 billion.

The government will fund $ 1.33 billion of the purchase price, with the Australian company paying the rest, Telstra said in a filing with the Australian Stock Exchange.

Telstra will own and operate 100 percent of the common shares of the company.

Telstra said he was initially approached by Canberra to provide technical advice regarding Digicel Pacific, which operates in Papua New Guinea, Fiji, Nauru, Samoa, Tonga and Vanuatu, to an extent, according to analysts, designed to counter Chinese influence.

The purchase removes the heavily indebted Digicel Pacific from Irish billionaire Denis O’Brien, who created parent company Digicel Group Holdings in 2001 and will remain a director on a board controlled by Telstra.

“Digicel Pacific is an attractive and essential business asset for telecommunications in the region. The Australian government is strongly committed to supporting quality private sector investment infrastructure in the Pacific region, ”said Andrew Penn, Managing Director of Telstra.

Digicel Pacific generated $ 431 million in revenue in the 12 months leading up to March 31 and earnings before interest, taxes, depreciation and amortization of $ 233 million for a total of 2.5 million subscribers. The majority of its sales came from Papua New Guinea, Telstra said.

O’Brien said the sale of Digicel Pacific marked a “very successful accomplishment” of his group’s investment in the South Pacific region, which began in 2006. Digicel added in a statement that the deal included a earn-out clause of $ 250 million in addition to the $ 1.6 billion reported by Telstra.

The sale will help the Digicel Group reduce its gross debt, which stood at $ 5.4 billion in June this year, according to Fitch estimates.

Telstra shares rose 2.4% in morning trading.

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