An international relations expert has stated that Telstra’s acquisition of Digicel’s Pacific arm eclipses Australia’s total aid to the region in any given year.

The Director of Lowy Institute’s Pacific Islands Programme Jonathan Pryke made the comments in a response to Samoa Observer email queries on Tuesday.

Australia’s telecommunications giant Telstra has acquired Digicel’s Pacific arm in a US$1.6 billion deal funded mostly by the Australian Government.

The takeover – and Australian taxpayers’ funding of it – has been widely viewed as a strategic play on Australia’s part as a means of blocking a Chinese-owned company from acquiring the network and giving it a possible strategic advantage in the region.

“This is an extraordinary deal by the Australian government, with a price tag that eclipses Australia’s total aid to the region in any given year,” Mr. Pryke said in a response to Samoa Observer email queries.

“The government stresses that, because of the sound fundamentals of Digicel’s business in the Pacific, it will make money off this arrangement with interest. But it is still assuming a lot of risk in order to incentivise Telstra – a big Australian company – to take a stake in the Pacific.

He said that Canberra sees telecommunications as a particularly sensitive area of strategic investment.

“In a 5G world telecommunications networks are going to underpin most utilities and services, including financial services. Australia has decided it is not in their interest for such control to fall into China’s hands,” he said.

“We will never know how serious China or a Chinese SOE were in the purchase of Digicel, but Australia has now removed this piece from the board.

“Hopefully among all of this discussion about strategic competition Australia has put some thought to ensuring all of this taxpayer money will go towards improving the cost and quality of Digicel’s services in the Pacific to help improve development indicators in the region.”

Dr. Denghua Zhang, a research fellow at the Australian National University, told the Samoa Observer earlier this week that last Thursday’s meeting between China’s Foreign Minister and his Pacific counterparts through video link as well as Telstra’s USD$1.6 billion purchase of Digicel’s Pacific holdings are examples of intensifying geo-strategic competition between China and Australia in the Pacific region.