Telstra seals $US1.6b deal to buy Digicel

Taxpayers will provide $1.9 billion to Telstra to help it buy South Pacific telco operator Digicel from Irish billionaire Denis O’Brien, under an agreement sealed between the companies.

Telstra will own 100 per cent of the new entity, telling the ASX on Monday morning the $US1.6 billion ($2.1 billion) deal would be completed within six months. Telstra chief executive Andy Penn said Digicel was a commercially attractive asset.

Telstra will contribute $US270 million of equity to the $US1.6 billion purchase price and the Australian Government, through Export Finance Australia, is providing the remaining $US1.33 billion through a combination of debt facilities and equity-like securities.Credit:Getty

“We previously said that if Telstra were to proceed with a transaction it would be with
financial and strategic risk management support from the Government,” Mr Penn said. “We also said that in addition to a Government funding and support package, any investment would also have to be within certain financial parameters with Telstra’s equity investment being the minor portion of the overall transaction. I am pleased that we have been able to achieve both of those outcomes.”

Telstra will contribute $US270 million of equity to the $US1.6 billion purchase price and the Australian Government, through Export Finance Australia, is providing the remaining $US1.33 billion through a combination of debt facilities and equity-like securities. A further $US250 million will be paid subject to business performance over the next three years.

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