Completed with funding from the Australian Government, through Export Finance Australia, the transaction values Digicel Pacific at up to US$1.85 billion.
This figure includes a three-year, $250 million earn-out provision, which equals roughly 8.3x adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of approximately $222 million for the year ended 31 March 2021.
"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," said Denis O'Brien, founder and chairman of Digicel Group.
"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."
In addition, a payment of $1.6 billion will go to Digicel Group on closing and the company also expects to achieve the maximum earn out payment of $50 million in line with the first earn out period which is based on service revenue.
"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," added Oliver Coughlan, group chief executive, Telstra.
"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."
Formally announced in October 2021, the deal is set to bolster Telstra's offering across the South Pacific, which CEO Andrew Penn described as " a unique and very attractive commercial opportunity" for the company.
"Beyond the economics of the deal, the business aligns with Telstra's core strengths and our decades of experience in providing international connectivity in the Pacific region. This will also strengthen our role in as a provider of international voice and data and ICT services to the region," he added at the time.
Digicel Pacific operates in Papua New Guinea, Fiji, Samoa, Vanuatu, Tonga and Nauru, and has already confirmed that there will be no change to the Digicel brand and that the current management team will continue to lead the business.
Capacity spoke to Digicel Pacific CEO Shally Jannif at length about the deal and the growing industry trends across these markets in the June/July issue of Capacity Magazine. Read the full conversation here.
At the same time of this announcement, Digicel Group has also confirmed that the Independent State of Papua New Guinea has agreed to enter into a binding international arbitration process, which is take in Singapore.
Through arbitration both parties aim to resolve the disputed one-time PGK 350 million (US$99.4 million) exit tax and to potentially waive a further PGK 50 million ($14.2 million) sought in respect of non-payment of the tax to date.
