Telstra Corp Ltd said last October it would buy the operations of Pacific-based Jamaica-based Digicel in a deal largely funded by the Australian government, seen by observers as a way to block China’s growing influence in the region. Operations include 2.5 million mobile phone subscribers across PNG, Fiji, Vanuatu, Tonga, Samoa and Nauru.
Digicel’s Irish founder Denis O’Brien met PNG Prime Minister James Marape last week to try to resolve the issue, Digicel said in an emailed statement to Reuters on Monday.
She said an “arbitrary, company-specific new tax” was introduced on March 25, which was “puzzling not only for Digicel, but also for the economy of Papua New Guinea given the implications of this sudden, bizarre and unprecedented tax on reputation and credit rating.
The law imposes a one-time tax liability of approximately $100 million on Digicel with an additional penalty of $14 million for non-payment, according to the statement.
“This issue needs to be resolved urgently given its implications for the sale of Digicel’s Pacific Telstra operations, but also given the ripple effects for all foreign direct investment leaving Papua New Guinea,” the agency said. statement.
“Digicel is now engaged in discussions with the government of Papua New Guinea and other relevant stakeholders,” the statement said.
Marape’s office did not immediately respond to a request for comment.
A Telstra spokesperson said in an emailed statement that the PNG tax was a matter for the current owner of Digicel Pacific. In response to questions from Reuters, it said it was still awaiting regulatory clearances from PNG for the transaction.
“Telstra’s acquisition of Digicel Pacific in partnership with the Australian government has not yet received all regulatory approvals and has not yet been completed,” she said.
The tax was first reported last November when Papua New Guinea presented its budget measures for 2022. Parliament heard that Digicel had 90% of the retail mobile and internet market .
The tax only applies to companies that control more than 40% of the telecommunications and banking market in PNG. The Bank of South Pacific, the only other company affected, told the Australian Stock Exchange on Friday that the tax came into effect on March 25 and was to be paid annually in September.
($1 = 1.3358 Australian dollars)