New PNG tax may delay Digicel Pacific sale to Telstra | #cybersecurity | #cyberattack


Telecommunications provider Digicel says it is looking at its legal options to get a tax imposed on it by Papua New Guinea removed, warning that this could delay the sale of its Pacific assets to Telstra.

The Additional Company Tax was approved by the PNG parliament on 29 March and imposes a one-time 350 million kina tax (about A$132 million) on Digicel, according to a statement released by Digicel Pacific on Monday.

An additional 50 million kina (A$18.9 million) would have to be paid if the tax was not paid on time.

Telstra announced on 25 October last year that it had acquired Digicel’s assets in the South Pacific region for US$1.6 billion, with the Federal Government contributing US$1.33 billion of this sum.

Reports in November last year had put the tax at a lower figure of 190 million kina (A$76 million) per year for major banks and 90 million kina (A$36 million) for telecommunications firms.

In its Monday statement, Digicel said the introduction of the “new arbitrary, company-specific tax” on 25 March without consultation was perplexing both for Digicel and PNG, given the reputational and credit rating implications of “this sudden, bizarre and unprecedented tax”.




It also pointed that under the ACT the disputed tax was payable on 30 March.

The telco said its owner, Denis O’Brien, had been assured, by PNG Prime Minister James Marape and two of his regional governors that the tax would not be imposed.

“This matter requires urgent resolution given its implications for the sale of Digicel’s Pacific operations to Telstra, but also given the knock-on consequences for all foreign direct investment exiting Papua New Guinea and the wider reputational and credit rating implications for Papua New Guinea internationally,” the Digicel statement said.

“In parallel with these discussions Digicel is also considering its legal options in the event that this discriminatory tax is not removed.

“These matters will affect the timing of the previously announced sale of Digicel Group Holdings Limited’s wholly owned subsidiary Digicel Pacific Limited to a wholly owned subsidiary of Telstra Corporation Limited.

“Prior to the introduction of the ACT, all but one of the required regulatory approvals to complete the transaction had been obtained.”

Telstra has not made any public statement about this development. However, the Australian telco told Reuters that the tax was a matter for the owner of Digicel Pacific.

“The acquisition of Digicel Pacific by Telstra in partnership with the Australian Government has not yet received all of its regulatory approvals and has not (been) completed yet,” it said.

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