Pacific telco backed by Australia, Japan, US bins Huawei

Digicel Pacific is possibly the world's only telco considered a strategic asset by nine countries. Which makes its decision this week to replace its Huawei networks with kit from Nokia a matter of considerable significance.

The carrier serves six nations – Papua New Guinea, Fiji, Samoa, Tonga, Vanuatu and Nauru – and is owned by Australia's dominant carrier, the formerly government-owned Telstra.

Telstra has long had ambitions to expand into Asia, but targeted business services in markets with larger populations and potential than the likes of Nauru – ranked the world's 224th most powerful nation in terms of GDP among the 229 listed by the CIA World Factbook. Papua New Guinea, ranked 130th, is the mightiest nation served by Digicel Pacific.

The Australian carrier acquired Digicel Pacific with the help of AU$1.3 billion ($840 million) from Export Finance Australia. The United States International Development Finance Corporation and the Japan Bank for International Cooperation later chipped in credit guarantees of $50 million each.

They did so because Digicel Pacific was up for sale, and the most enthusiastic bidder was China Telecom.

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China is very interested in South Pacific nations, having offered to help several improve their network infrastructure and infosec capabilities. Such diplomatic outreach often precedes an introduction to Chinese tech companies.

As any student of World War II can attest, Pacific island nations are enormously important in any conflict across that enormous ocean. The prospect of China having influence over Pacific nations' comms infrastructure is therefore of concern to the US, Japan, and Australia.

Which is why the three nations worked to have Telstra buy and operate Digicel Pacific.

And also why they're probably cheering the fact that Telstra yesterday announced it would replace Digicel Pacific's Huawei-powered networks with Nokia kit.

A Telstra spokesperson told The Register "Digicel Pacific has undertaken a thorough process to choose a new vendor to best deliver its network's needs and on the best commercial terms" and "will continue to work with our current network partner Huawei to maintain the infrastructure to a high standard, as we gradually transition to Nokia's technology."

As you would, given that Digicel is the dominant provider in the markets it serves, and therefore plays a critical role in their economies.

Huawei, however, is effectively banned in Australia, Japan, and the US. The three nations that prevented Digicel Pacific from being owned by China can therefore be satisfied that Huawei's presence in their new investment won't be permanent.

Telstra shareholders, meanwhile, gained an asset that produced AU$719 million ($455m) of revenue in the 2022/23 financial year, at five percent EBITDA. ®