The Guardian • Issue #2016

Telstra buys Digicel Pacific and tax payers foot the bill

  • The Guardian
  • Issue #2016

Photo: Marques Stewart – (CC BY-NC 2.0)

The multinational telecommunications company Digicel, has recently (14th July, 2022) completed the sale of its Pacific subsidiary to Telstra. While there has been much huffing and puffing from the new regime in Canberra about Australia “taking care of its Pacific family,” we need to set this in perspective.

To begin with, the negotiations concerning the sale began some time ago, in 2021. Digicel primarily operates in the Caribbean, and had a subsidiary company Digicel Pacific (DPL). This subsidiary serviced six Pacific countries; Papua New Guinea, Fiji, Samoa, Vanuatu, Tonga, and Nauru. Telstra’s purchase at more that AU$2 billion was not paid by the company itself, but by Australian tax payers through the Export Finance Australia outfit.

In other words, this was a “standard” transaction between businesses, with the costs borne by ordinary tax payers. Run of the mill in Australia, it seems.

There is another fact worth noting. Digicel had an outstanding tax bill to pay in Papua New Guinea of PGK 350 million (approximately AU$150 million), along with a further PGK 50 million (about AU$20 million) in relation to non-payment of the tax to date. The question we need to ask here is whether Australian tax payers will also foot this bill, especially since the issue is still subject to arbitration in Singapore. Or will Australia try to use its leverage over Papua New Guinea – a very poor country – to avoid paying the bill?

It seems as though the political spin from Canberra is hot air. We should not be surprised.

Further questions need to be asked. Although the “brand name” will remain the same, what benefit will this purchase really have for countries seeking to alleviate poverty? Being a company focused on profit, we can expect that Telstra will seek to slash jobs to improve their profit margin. This will take place in a context in which Vodafone Fiji, for example, has far more efficient coverage and internet speeds than either Telstra or Optus can achieve in Australia. Further, will Telstra up the costs for the Pacific countries it now services? In Australia, we have become too accustomed to high prices for sub-standard telephony. Is this to be the fate of the six Pacific countries who find themselves at the mercies of Telstra?

Finally, what about the much-touted “Pacific family”? Again and again in the Pacific, we find people objecting to this paternal metaphor. Australia and New Zealand see themselves as the parents of a family of Pacific children. In the past, this was was known as “protectorates” for Pacific Islanders who did not know how to take care of themselves. Today it is a “family” with the parents raising their “children” to “maturity.” And it seems the modern-day “blackbirding” is back as well, with Australia ramping up programs to bring underpaid Pacific Island workers to Australia for picking fruit and vegetables, as well as working on building sites. Old habits die hard.

The Guardian can also be viewed/downloaded in PDF format. View More