In a joint venture, the Australian government and Telstra will buy a Pacific telecoms company. The decision is being considered as a political stumbling block to China’s regional influence.
Telstra described the $2.1 billion ($1.6 billion; £1.2 billion) purchase as a “unique and very attractive commercial opportunity to strengthen our presence in the region.”
In Papua New Guinea, Fiji, Samoa, Vanuatu, and Tahiti, Digicel Pacific employs 1,700 employees. For months, the company’s future has been the subject of conjecture.
Digicel refuted a report last year that it was in talks to sell its Pacific division to China Mobile, which is owned by the Chinese government.
The Australian government contacted Telstra “to provide technical advice in relation to Digicel Pacific,” which is “important to telecommunications in the region,” according to Telstra.
According to Telstra, the government agreed to fund the majority of the bid. Analysts believe the corporation would be appealing to China if it wanted to establish more control in the region.
“Partnership on infrastructure development is a critical aspect of our Pacific step-up,” a spokeswoman for Australia’s Department of Foreign Affairs and Trade told Reuters.
Australia has increased its footprint in the Pacific as tensions with China have risen. This includes contributing $1.5 billion to infrastructure projects in the region, as well as joining the Quad group, which includes the United States, India, and Japan, and the Aukus security pact, which includes the United States and the United Kingdom. In 2018, it also partially funded a 4,700-kilometer (2,900-mile) Coral Sea cable to prevent Huawei Technologies from laying it.
It is also assisting Palau in the financing of an undersea optical fibre connection. Control of telecommunications networks by China has long been a source of concern for the United States and its allies.
As a result, numerous countries, including the United States, the United Kingdom, and Australia, have banned Huawei and other Chinese corporations from supplying phone lines and 5G nnetwork.