The geopolitical tables have turned completely on their head.
Wow. Global politics is moving so quickly I can barely keep up.
I’m not sure most people can.
The latest in my long list of “Oh my god has it really come to that?” list is the state-sponsored purchase of a major Telco in the Pacific.
When you read ‘state-sponsored” I bet you thought China. Or maybe North Korea.
Nup. I’m talking about Australia.
So the Aussie government – which is really you and me – is going to give Telstra a tonne of cash so it can buy Digicel Pacific – the largest Telco in our Pacific neighbourhood.
Digicel has its HQ in Papua New Guinea. It operates in PNG, Vanuatu, Nauru, Samoa, Tonga and Fiji. It has 2.5 million mobile phone and internet subscribers and 1700 employees.
So kind of a big deal.
And Telstra is going to buy it for $US1.6bn. ($2.1 billion)
Well, Telstra and us.
Telstra is tipping in just $US270 million. The rest is coming from a massive cash injection from the Aussie government. Some of it will be a loan. Some of it will be equity.
So you, as the Aussie tax-payer, now own a telco.
Which is kind of odd when you remember that it wasn’t all that long ago that we, as taxpayers, decided we didn’t want to own a Telco and privatised Telstra.
But now we’re giving that privatised Telco and bunch of cash so it can buy another Telco in our name.
And for Telstra it’s a very sweet deal. Digical creates about $230m of annual free cash flow, so Telstra gets its money back in almost a single year – depending on how they carve up the profits.
But why are we, as taxpayers, now in the Telco business?
China.
There was a fear that if we didn’t buy Digicel, China would.
And if the idea that China might own the mobile network in our geopolitical backyard doesn’t alarm you, you probably haven’t been paying attention.
And it’s not just about spying – for which China does have runs on the board. (And let’s be grown-ups here, we’re all doing it.)
But it’s about misinformation too. Australian Strategic Policy Institute head of international cyber policy, Fergus Hanson, says
“The bigger risk is China maliciously changing the information environment through default settings of news providers on mobile phones, which we know through ‘wolf warrior’ diplomacy is a real thing.”
So pump news channels with pro-China anti-Australia ‘news’, and turn the Pacific against us.
So what choice did we have?
And look, it is probably the best way to do it.
It doesn’t make sense for the Aussie government to run a telco in the Pacific itself. Telstra is far better placed to do that.
And who better to do it than Telstra.
But this where we’ve come to.
It wasn’t that long ago that we were selling our own strategic infrastructure to China, like the Port of Darwin. Now we’re pre-emptively buying up strategic infrastructure around the region to make sure China doesn’t get its hands on it.
As John Kehoe at AFR says Australia is weaponizing corporate power
And this is just how far we’ve come in a few short years.
Gone of the days of being best friends forever with China.
The relationship between China and the US has gone into one of ‘strategic rivalry’.
Australia had to choose sides. It could no longer have its cake and eat it.
And for better or worse, we chose the US.
But this is the new world order.
And we’re all still figuring out what it means.
Anyway, congratulations. You now own a telco.
JG.