Telstra Corp Ltd on Monday, 12 July was in discussions to buy the Pacific operations of the telecom company Digicel Group, Reuters news service reported yesterday, 18 July.

The deal is reported that it could be worth Australian $2 billion with the Australian government paying around A$1.5 billion.

Telstra Corporation Ltd is an Australian telecommunications company, a full service domestic and international telecommunications provider for Australia.

Telstra had stated that if the deal were to go through, it would be with “significant” Australian government funding and support, while Telstra’s contribution will form a “minor portion”.

“The discussions are incomplete and there is no certainty that a transaction will proceed,” Telstra stated.

Digicel Pacific is a leading telecom provider in Papua New Guinea, Fiji Nauru, Samoa, Tonga and Vanuatu.

Digicel Tonga Ltd, a subsidiary of Digicel Pacific officially launched its operation in Nuku’alofa on May 7, 2008, and became the second telecom company for Tonga, with the Tonga government, owned Tonga Communication Corporation.

The Australian federal government has approached Telstra and other commercial businesses to sound out their interest in potentially taking an ownership stake in the Pacific operations of a telecommunications business in order to block China from buying the assets.

“If China ends up buying it, they will hear and see everything’ was the headline of story on the Australian Financial Review Magazine July 18, stating that the “National security experts in Canberra and Washington are alarmed that China could be in the box seat to beat private equity firms to acquire telecommunications assets in the Pacific that would enable Beijing to spy on Australia's closest geographical neighbours.”