Digicel moves to buy Telecom

Wednesday December 18, 2013 Written by Ben Chapman-Smith Published in Technology

Global telecommunications giant Digicel is “kicking the tyres” and making another play at buying a majority stake in Telecom Cook Islands.

Finance Minister Mark Brown said Digicel Pacific is currently looking at buying out Telecom New Zealand’s 60 per cent shareholding in the local company.

“Digicel is back on the beach, they’re kicking the tyres again. They’ll probably make an offer to Telecom New Zealand,” he said.

Before things progress any further, Telecom New Zealand has to advise its own shareholders of any offer made, he said.

Brown said the Cook Islands government – which owns the other 40 per cent stake in Telecom Cook Islands (TCI) – will have the opportunity to buy the company outright if Digicel does make an offer.

“The first thing to consider is whether the government would buy Telecom New Zealand’s shares because there’s a right of first refusal on the government. So whatever Digicel puts to the government we have a right to match that.”

However, Brown said the government has no intention to exercise that right.

“We’re quite happy with our minority shareholding. I don’t think it would be good to get back into the business of running a telecommunications company - it’s best left to the private sector.”

Digicel, which operates in 31 countries, would bring “a lot more clout” and investment into the Cook Islands, Brown said.

“It’ll be interesting to see how things progress because there’s a big difference between Telecom New Zealand and Digicel. Digicel have a whole series of other things they bring into a country that Telecom New Zealand doesn’t because of their global presence.”

Outside of telecommunications services, the company would probably throw its considerable financial weight into sponsoring national sports teams, he said.

“Hopefully they might be able to reach an agreement. It might change the telecommunications landscape a little bit.”

With operations already in Samoa, Nauru, Papua New Guinea, Tonga, Vanuatu and Fiji, Digicel has been looking to move into the Cook Islands for a number of years.

The company has made two previous attempts to buy TCI, the most recent in 2009 when it was preparing to pay around $20 million for the company’s assets.

Digicel said then that its decision to withdraw from the negotiations was influenced in part by the weakening of the New Zealand dollar.

Brown said he does not know what TCI is worth, but the price will be a lot higher now than it was in 2009.

“Since then there’s been a lot of investment by Telecom Cook Islands in the services they provide.”

TCI chief executive Jules Maher said he had “no comment” to make on the matter.

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