[ad_1]
Denis O’Brien’s Digicel is now juggling multiple approaches for its telecommunications business in the Pacific Islands, including from entities directly or implicitly linked to China and Australia.
iti is advising the Irish-owned group on deals that could value its Pacific branch at $ 2 billion (€ 1.64 billion), as geopolitical tensions between Canberra and Beijing create a significant premium beyond purely economic value. .
Digicel operates the largest mobile networks in Australia’s closest geographic neighbor, Papua New Guinea, as well as in Fiji, Tonga, Vanuatu and Samoa.
At one stage earlier this year, it is understood that Digicel analyzed the potentially floating Pacific Island units on the Sydney stock market, but nothing came of it, and they subsequently provided some of the security when the group closed. a debt agreement with the bondholders.
The latest reports that Chinese companies such as China Mobile, Huawei and ZTE are potential bidders for the business have sparked a strong backlash in Australia, which is already embroiled in an increasingly bitter trade and national security showdown with Beijing.
Digicel’s assets in the Pacific include regionally important telecommunications infrastructure, adding to the highly loaded mix.
Australian Prime Minister Scott Morrison this month accused China of violating international trade rules and bilateral agreements over its alleged ban on imports of Australian coal.
The coal cut followed previous measures in China, including a consumer boycott of Australian products seen as a ban on everything but the name, while in May, China imposed an 80.5% tariff on Australian barley. despite a free trade agreement.
China is a major Australian trading partner, but the Canberra government is increasingly alarmed by the Asian nation’s more assertive stance in the region and in Hong Kong, with whom Australia has deep economic and social ties.
Rapidly escalating tensions mean that any Chinese economic expansion into what Australia considers its economic and security backyard is likely to see a response.
That’s potentially good news for Denis O’Brien. It is understood that the Australian government is examining the possibility of supporting a non-Chinese offering for Digicel Pacific by providing or underwriting a low cost loan, or seeking like-minded sponsors in the US or Japan.
The country has already banned the use of China’s Huawei technology in its national 5G telecommunications infrastructure.
The tension in the Pacific now could generate a second windfall in a year for Digicel.
In June, a French court awarded the company $ 200 million in damages. The award ended a long-standing legal action against
The French telecommunications company Orange on anti-competitive practices in the French Caribbean.
Digicel is looking to use part of that windfall to buy back debt that could otherwise be exchanged in the future for a stake in the company under the terms of a deal reached earlier this year..
This year’s agreement with the bondholders dramatically reduced Digicel’s debt burden from $ 7 billion to $ 5.4 billion, definitely reducing interest bills and total leverage at the expense of the group of lenders, while Denis O’Brien contributed $ 50 million in cash and assets to secure bondholder support.
Papua New Guinea is one of Digicel’s most important units and the larger business in the Pacific is relatively less indebted than the group’s other major markets in the Caribbean, meaning that a sale could produce a windfall to reduce debt. .
Irish independent
[ad_2]