Australia seeks to block China with stake in Pacific mobile networks

The Australian government plans to provide the bulk of the financing for the acquisition of mobile networks in six Pacific countries, a move which foreign policy experts say is designed to prevent China from buying strategically important assets.

Telstra Corp., Australia’s largest communications provider, said Monday it plans to purchase mobile networks in Papua New Guinea, Fiji, Nauru, Samoa, Tonga and Vanuatu, and that the Australian government would help pay for the acquisition. The networks, currently owned by the Jamaica-based Digicel Group, are adjacent to submarine cables that carry communications between Australia and its neighbors.

A deal would be the latest move by the Australian government seeking to limit Chinese influence in the region, particularly in the telecommunications sector. Australia has banned Chinese telecommunications company Huawei Technologies Co. from getting involved in its 5G mobile network. In 2018, Australia announced that it would build an underwater broadband internet cable to the Solomon Islands, excluding Huawei from the project. And more recently, Australia has started reviewing for security reasons the lease of a Chinese company in the port of the city of Darwin in northern Australia.

Telstra said there was no certainty that a transaction would go through.

The company, which was owned by the Australian government until 1997, has recently focused more on asset sales and would not have considered acquiring Pacific without the government’s request, according to a person familiar with the matter. Telstra has been in talks with Digicel for several weeks, the person said.

The Australian Department of Foreign Affairs and Trade has said that, where appropriate, the government supports Australian companies investing in infrastructure in the Pacific. The Australian Embassy in China did not respond to requests for comment. A representative of Digicel, which experienced financial difficulties amid the Covid-19 pandemic, could not be reached.

Tensions between Australia and China have intensified since last year when Australian Prime Minister Scott Morrison backed calls for an investigation into the origins of the Covid-19 pandemic. China has since imposed tariffs or other restrictions on Australian products, including coal, wine, wool and cotton.

Under Mr Morrison, Australia’s center-right government has sought to deepen the country’s ties with the United States, its historic ally, but this has been a delicate balancing act given that Australia also depends on more in addition to China for its economic well-being. China buys much of Australia’s iron ore, and Chinese students and tourists flocked to Australia before the coronavirus pandemic closed international borders.

Australia’s decision to rule out China as a potential buyer was driven by security concerns, said John Lee, senior researcher at the United States Studies Center at the University of Sydney. If China acquires the Pacific mobile networks, it could monitor Australian communications to and from the region and use its control of assets as leverage, he said.

“It would be almost over when it comes to excluding or minimizing Chinese influence over these developing economies,” said Dr Lee, who served as an advisor to former Australian Foreign Minister Julie Bishop in 2016. to 2018. Australia and the United States “focus on the South Pacific and in particular put constraints on Chinese influence,” he added.

Australian investment could be the first after granting new powers to its export credit agency to fund deals that serve the country’s national interests. Australia’s Trade Minister announced the legislation last month, but no debate in parliament has yet been scheduled.

For Telstra, the agreement would be an opportunity to work with the government during the probable privatization of Australia’s broadband network. Telstra recently restructured to allow for an offer.

“Now is the right time for Telstra to do the federal government a favor. The favors are coming back, ”said Jonathan Pryke, director of the Pacific Islands at the Lowy Institute, a think tank in Sydney.

This story was posted from a feed with no text editing

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