Two outstanding issues affecting Caribbean and Central America operator Digicel appear to have been resolved, or come closer to resolution, after the sale of its Pacific operations and the agreement by the parties involved to an arbitration process to settle a dispute with Papua New Guinea over tax.
The leading news story, inevitably, is that Digicel Group Holdings Limited (DGHL) has finally announced the completion of the sale of Digicel Pacific Limited, its wholly owned subsidiary. The sale is to a subsidiary of the Australian telecommunications company Telstra Corporation Limited, with funding from the Australian government, through Export Finance Australia, Australia's export credit agency.
The transaction values Digicel Pacific at up to US$1.85 billion, inclusive of a three-year, US$250 million earn-out. A payment of US$1.6 billion, before deductions for customary working capital and other adjustments, is payable to DGHL upon closing of the transaction. Digicel expects to achieve a payment of US$50 million in respect of the first earn-out period, which is based on service revenue performance for the year ended 31 March 2022.
Digicel has also reported that Papua New Guinea has agreed to enter into a binding international arbitration process to resolve a disputed one-time US$99.4 million exit tax demand aimed at Digicel PNG and to waive a further US$14.2 million sought in respect of non-payment of the tax to date. As part of this process US$99.4 million has been placed in escrow on closing pending the outcome of the arbitration, which will take place in Singapore.
Digicel Pacific operates in six markets in the South Pacific including Papua New Guinea, Fiji, Samoa, Vanuatu, Tonga and Nauru. There will be no change to the Digicel brand in the six markets and the current management team will remain with and continue to lead the business.
