The Australian government and telecommunications giant Telstra are buying a Pacific telecommunications company in a joint venture.
The move is seen as a political block on China’s influence in the region.
Telstra called the A $ 2.1 billion (US $ 1.6 billion; £ 1.2 billion) deal “a unique and very attractive business opportunity to strengthen our presence in the region.”
Digicel Pacific employs 1,700 people in Papua New Guinea, Fiji, Samoa, Vanuatu and Tahiti.
The company’s future has been the focus of speculation for months.
Last year Digicel denied a report which was in talks to sell its Pacific arm to state-owned China Mobile.
According to Telstra, the Australian government has turned “to provide technical advice in relation to Digicel Pacific”, which is “key to telecommunications in the region”.
The government then agreed to finance most of the offer, Telstra said.
Analysts say the company would otherwise be attractive to China as it seeks to assert greater authority in the region.
“Digicel is the largest player in the Pacific and Australia sees it as a strategic asset that they cannot allow it to fall into the hands of China,” said Jonathan Pryke of the Lowy Institute, a Sydney-based think tank.
“They are keen to bring Australian business back to the Pacific and have come to the conclusion that they will have to sign.”
A spokesperson for the Australian Department of Foreign Affairs and Trade told newswire Reuters, “Collaboration on infrastructure development is a critical part of our breakthrough in the Pacific.”
Amid growing tensions with China, Australia has increased its presence in the Pacific.
This includes the allocation of $ 1.5 billion for investments in infrastructure projects in the region, as well as joining the Quad group, with the United States, India and Japan, and the Aukus Security Pact, with the United States and the United Kingdom.
- Australia’s big bet on the United States over China
It also largely funded a 4,700-km (2,900-mile) Coral Sea cable in 2018 to prevent Chinese telecom company Huawei Technologies from laying it.
It is now also helping to finance an undersea fiber optic cable for Palau.
China’s control of telecommunications networks has long been a concern for Washington and its allies.
This has led to many countries banning Huawei and other Chinese companies from providing 5G phone lines and networks, including the US, UK and Australia.
- Papua New Guinea
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