Digicel completes sale of of US$1.85 billion Pacific business to Telstra

Caribbean telco Digicel has completed the sale of ​​Digicel Pacific to Australia’s largest telco Telstra.

The transaction, which has been completed with funding from the Australian Government through Export Finance Australia, values Digicel Pacific at up to US$1.85 billion. That figure is inclusive of a three year, US$250 million earn-out, equating to approximately 8.3 times Digicel Pacific’s EBITDA of approximately US$222 million in the year ended March 31, 2021.

There were fears that the deal could have been derailed by a tax dispute between Papua New Guinea (PNG) and Digicel. The country however has agreed to enter into a binding international arbitration process to resolve the disputed one-time PGK 350 million (US$99.4 million) exit tax and to waive a further PGK 50 million (US$14.2 million) sought in respect of non-payment of the tax.

Digicel Pacific operates across six markets in the South Pacific including Papua New Guinea, Fiji, Samoa, Vanuatu, Tonga and Nauru. The branding in these markets will remain unchanged, as will its management team.

Denis O’Brien, Digicel Founder and Chairman, said: “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 10 million people across six of the most exciting economies in the region. 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, said: “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.”