Telstra buys Digicel's Pacific operations with government backing

Telstra (ASX: TLS) agreed to buy the Pacific operations of telecoms firm Digicel Group for at least US$1.6 billion, with the Australian government providing most of the financing.

Why it matters: This is about Australia trying to blunt China's rising regional influence, following reports last year that Digicel was in talks to sell its Pacific business to China Mobile.

Details: Australia's government will front US$1.33 billion of the deal, which could grow by $250 million due to earnout provisions.

The bottom line: "Digicel is the South Pacific's biggest telco business. Headquartered in Papua New Guinea, it also operates across Vanuatu, Nauru, Samoa, Tonga and Fiji, with 2.5 million mobile phone and internet subscribers and 1700 employees." — Lucas Baird and John Kehoe, AFR