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The cost of a mobile call – the Digicel bail-out and regional tensions

Written by: (Contributed) on 3 November 2021


The announcement from the Morrison coalition government in Canberra that they intended investing $1.78 billion in Digicel, an offshore mobile telephone company, has revealed how high the stakes have become with US-led diplomatic hostilities toward China. Fears were raised about China making a possible bid for ownership of Digicel; the company is a major telecommunications provider in the Pacific region.

Australia, as the 'Mother Country' in the Pacific, has historically relied upon compliant governments across the region to act as a front line for military and security provision for the northern and eastern areas close to the country. Australian control of the Pacific Islands telecommunications systems forms part of the same US-led provision and neo-colonial diplomatic relations.

In late October and early November Australian coalition prime minister Scott Morrison left Canberra for a series of high-level diplomatic talks with various counterparts: the G20 summit in Rome and the Glasgow United Nations climate summit together with a meeting with leaders of the South Pacific countries. For Morrison, the latter meeting was by far the most important; it was given scant publicity to not attract unnecessary attention from elsewhere. The three short lines of one single column, nevertheless, spoke volumes when viewed in the context of the recent Digicel controversy. (1)  

The South Pacific region has become a major focus for US-led regional diplomatic activity channelled through Canberra. In recent times a stream of intelligence assessments about the South Pacific have raised concerns that China has been able to increase its presence on the islands, challenging traditional US influence.

Communications across the South Pacific and wider region, historically, have been problematic; limited infrastructure has hindered geographical travel and most islanders have come to rely upon Digicel, a mobile telephone company, for their 3G and 4G telecommunications. In order to prevent China making a successful bid to acquire control of Digicel, the present Australian coalition government has provided $1.78 billion of tax-payers money to invest in Digicel together with a partnership with Telstra; the latter, however, has only provided $361 million of their shareholders' funds for the acquisition. The government finance was produced by the Morrison administration in a manner akin to a rabbit being pulled out of a top hat following an announcement by the present Irish owner of Digicel, Denis O'Brien, that he wanted to sell the company.

The Digicel government bail-out with Telstra was officially announced in the name of 'the nation's strategic security'. (2) The countries where Digicel have tended to operate, the South Pacific together with Fiji, Samoa, and countries in Polynesia have been regarded as strategic from the point of view of US and Australian military and security considerations. 

The recent Digicel moves follow similar steps taken in 2018 when the Australian government was able to push China's Huawei telephone company aside and build the Coral Sea telecommunications cable linking Australia with the Pacific countries. Australia is, at present, partnering with the US and Japan to finance a submarine cable for Palau, one of the few countries across the region which still supports Taiwan. (3) No information has been made available about costs incurred which are considered to be enormous.

China, however, has still been able to establish a foothold across the wider region as 'key providers of communications technology … striking deals with governments to build terrestrial broadband networks'. (4)

Submarine telecommunications cables carry more than 95 per cent of international data, including telephone traffic, across the Indo-Pacific. (5) US-led concerns have already been raised about China becoming an emerging submarine cable provider. It has, at present, about ten per cent of the global market share, and has built or repaired an estimated hundred of the world's top four hundred submarine cables. (6)  

While official diplomatic media releases regarding the Digicel controversy were extremely limited, there was little ambiguity about US-led military planning. It was noted China's interest in Digicel 'would have alarmed the Australian, US and Japanese governments … China already has extensive interests in communications infrastructure in the Pacific region'.
(7) And, 'allowing a Chinese company to take control of Digicel would have given Beijing an intelligence and propaganda pathway into the lives of elite and everyday Pacific islanders'. (8) Despite the recent moves by the Morrison coalition government to buy Digicel, however, fears still exist in Canberra that 'China could still set up their own rival service provider'. (9)

It is interesting to note there was no publicity given to the meeting between Morrison and South Pacific leaders; it took place in relative secrecy, despite $1.78 billion of taxpayers’ money being used for an investment project which may well not even exclude China from becoming an even more important competitor in the future. Just consider how the $1.78 billion could have been used in Australia for financing projects to enhance the lives of working-class people. Neo-colonial relations with Pacific Island leaders are, however, regarded as more important and in line with the so-called US-led 'alliance', and to keep Telstra shareholders happy: We need an independent foreign policy!

1.     Push for more aid for poor nations, Australian, 27 October 2021.
2.     Building Pacific island telco ties, Editorial, Australian, 26 October 2021.
3.     Digital age is vulnerable to risks and threats from what lies under the surface,  Australian, 19 October 2021.
4.     Digicel deal thwarts China's Pacific reach, Australian, 26 October 2021.
5.     Digital age, Australian, op.cit., 19 October 2021.
6.     Ibid.
7.     Editorial, Australian, op.cit., 26 October 2021.
8.     Ibid.
9.     Digicel deal, Australian


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