Do You Think The Aust Govt Should Use $1.5b of Taxpayer Money to Buy an Overseas Mobile Phone Company?

GG57 on 19/07/2021 - 10:33

Reports in the 9News and other sites over the weekend of the Federal Government proposing to support Telstra in a bid to buy Digicel telecom assets in the Pacific.
https://www.theage.com.au/business/companies/government-and-…

"The Australian Financial Review reported on Thursday that the government had approached Telstra to assess its interest in taking an ownership stake in Digicel’s Pacific operations…Digicel has a 3G and 4G mobile phone network as well as access to undersea cables in the region."

I'm all for supporting the region, more than we currently do, but $2b. of taxpayer money to support Telstra seems excessive to me. All for what appears to be a bit of government posturing against China.

Thoughts?

Financial

Comments

    • nomoneynoproblems on 19/07/2021 - 11:19
      +3

      $.50 for you. Good job comrade.

      • waterbottled on 19/07/2021 - 11:24
        -1

        Thanks comrade. Here's $0.25 for you. We are equals comrade.

    • mskeggs on 19/07/2021 - 11:24
      +3

      Obviously China influence related. Cheap way to cut back Chinese influence in the Pacific.
      Even if you only see China as an economic competitor, still worth putting a few speed bumps on the way for them.

      • GG57 on 19/07/2021 - 11:43

        That is the obvious Fed govt view, but I'm not sure how this could change the role of other countries in the Pacific.
        Trade with China (by Pacific countries) will not be impacted regardless of who owns the mobile network infrastructure and business.

        • mskeggs on 19/07/2021 - 12:08
          +5

          What you say is true in a way, but China increases its influence over other nations in lots of ways, for example by granting them access to finance on preferential terms, and influencing further decisions via leverage from past investment.
          It seems really simple to me, for example, for a Chinese owned telco on your island to say "We'll prioritise 5G upgrades to you, if you look favourably on our fishing rights application".

          Fewer opportunities for this kind of cross leverage are desirable (although I note AU is no paragon of virtue in this regard), and the more critical the infrastructure is, the stronger the leverage.

          • lonewolf on 19/07/2021 - 12:14

            @mskeggs: This is very true, has been happening a lot.

            https://www.nytimes.com/2018/06/25/world/asia/china-sri-lank…

          • GG57 on 19/07/2021 - 13:18

            @mskeggs: I agree with you re the provision of finance to Pacific island country governments.
            Would it not be better if Australia offered that same (or better) finance, on a proactive basis, or provide industry-specific support? Our government only seems to make ad hoc offers, and only when China has shown an interest.

    • GG57 on 19/07/2021 - 11:41

      That is certainly one approach; one the current Fed govt seems to have not considered.

      • mskeggs on 19/07/2021 - 11:59
        +1

        Would you expect the USA not to retaliate if AU deepened ties to China at the expense of the US?

        On a purely pragmatic view, the US has a much more interventionist history.

        • GG57 on 19/07/2021 - 13:20

          Don't get me started on our government's relationship with the USA government. A totally different discussion there.

    • T-man on 25/07/2021 - 21:02

      Go and eat bats and wuhan virus by yourself, we and the world don’t need any more of them.

  • Drakesy on 19/07/2021 - 11:26
    +8

    I guess America already holds a large stake in privatised companies anyway so it was inevitable it would happen here.
    Do i agree with it?
    No

    Governments run countries and necessary services/infrastructure.

    The day they privatised Telstra was the day that Telstra had to operate as a private corporation with no handouts. It's a privately owned and therefore funded operation. If they need the money, they complete a capital raising through their shareholders. No point paying dividends only to go to the government wanting them to cover their investment strategy.

    And then there's Qantas, don't get me started on its special treatment - practically a private company treated like a government department i.e. endless subsidies and handouts (jobkeeper light)

    • GG57 on 19/07/2021 - 11:45
      +1

      To be fair, I'm not sure if it is Telstra wanting this, of if the Fed govt is utilising Telstra to achieve some other outcome.

  • morse on 19/07/2021 - 11:28
    +2

    I'm not sure if it's just posturing. It's also trying to maintain influence in the region, which could be considered important to defense and economic strategy. It's going to get expensive though if Australia does it across the board.

    I'd love to see Australia offer PNG a better/alternative offer instead of the Chinese fishing operation in Daru going ahead https://www.abc.net.au/news/2021-02-10/png-daru-fishing-park… . There has also been consideration to things like buying out the lease on the Darwin Port.

    Perhaps Australia needs to financially partner with other countries such as US, Taiwan, Japan on some of these initiatives.

    • GG57 on 19/07/2021 - 11:49
      +5

      Maintaining influence in the region has been a downfall of the Australian government for decades. They do the bare minimum, and have been effectively reducing foreign aid in the region for years.
      I agree that Australia should do a lot more. But why wait for China to move and then try to counter it? Why doesn't our government be proactive rather than reactive.

      My view is that defence is a red herring; I can't see any need for China to pose a military threat to Australia when our current policies enable Chinese companies to buy whatever they want to in the way of resources.

      • mskeggs on 19/07/2021 - 12:00
        +4

        I think this encapsulates the flaws in Australian foreign policy this century extremely well.

  • TheBird on 19/07/2021 - 11:35
    +5

    If it's half accurate with the way that China is being portrayed, I think it's a smart idea.

    • GG57 on 19/07/2021 - 11:51
      +2

      China's focus is almost certainly in accessing resources from the region.
      Along with some diplomatic stuff around the view of who owns Taiwan.

      • TheBird on 19/07/2021 - 15:45

        I wouldn't be surprised if there was some revenge plans in their 100 year plan… against the west in for the opium war and other things, real and imagined. It's cheaper to buy their way into causing instability in their enemies (which we have to spend through the nose to fix), than it is to go to war.

        In the next ten years, I wouldn't be surprised if we moved to do the same moves back to them.

        For the time being, they're more reliant upon us than we are upon them. The problem is, it'll hurt both sides. If we make a big move, it'll still hurt us even though it'll hurt them more.

        Thsi move to spend 2 billion is preventative. It's us spending more now than what's required in the hope that later on, it'll prevent them from making similar moves in the future which could cost us much more… at least this move will give us some return. Who knows, long term, it might even turn a profit.

        All that being said, I also think you're right about the resources and Taiwan.

        • GG57 on 19/07/2021 - 15:48

          What do you feel the Aust government is trying to prevent?
          What are the benefits for Aust from this overseas 'investment'?
          What are the 'similar moves' that 'could cost us more'?

          • TheBird on 19/07/2021 - 16:04

            @GG57:

            What do you feel the Aust government is trying to prevent?

            Things that don't work well for us. An unlikely example could be getting drawn into a war (whether it be an actual conflict or trade war) with our neighbours.

            What are the benefits for Aust from this overseas 'investment'?

            It's similar to the investment in the ABC programs that span the pacific. There are economical and political benefits to be trusted and liked by your neighbours. Stability in the region has significant value.

            What are the 'similar moves' that 'could cost us more'?

            Having to fix a broken or unstabilized neighbour.

            These are just small little examples. I get that it can come across as wierd.

            What do you think? I'm guessing you're against it?

            • GG57 on 19/07/2021 - 16:21

              @TheBird: I can assure you that our neighbours in the Pacific have absolutely no interest in any type of conflict with Australia, except on the rugby field.
              Our government has substantially reduced the overseas broadcasts of (primarily) ABC programming over recent years, and replaced some of the ABC-sourced shows with reality and other nonsense content.
              I can't recall any instability in the region (apart from the French bombing in Auckland harbour) for decades. Even military coups in Fiji did not adversely impact on Australia.

              Our government just seems to be willing to outlay this $2b. for no gain (apart from the sellers of Digicell).

              • TheBird on 19/07/2021 - 17:50

                @GG57:

                I can assure you that our neighbours in the Pacific have absolutely no interest in any type of conflict with Australia, except on the rugby field.

                When influences change, so can their position. If it turns, I guess it's lucky for us that it'll probably be our children that will have to deal with it.

                Our government has substantially reduced the overseas broadcasts of (primarily) ABC programming over recent years, and replaced some of the ABC-sourced shows with reality and other nonsense content.

                It's not what I'm talking about, but yes, there's been a reduction in funding which has me concerned.

  • rektrading on 19/07/2021 - 11:56
    +2

    The Australian central bank printed 100s of billions in the past 12 months. Another 2b isn't going to break the bank.

    Reserve Bank governor Philip Lowe is prepared to continue pumping out cheap money longer than other nations, declaring he’s “waiting for evidence” that inflation is picking up before tightening his policy belt.
    https://thenewdaily.com.au/finance/finance-news/2021/07/06/r…

    • GG57 on 19/07/2021 - 13:21

      So, do you think this is a good thing or a bad thing.
      If you think it is not good, what is your opinion on the $2b then?

  • TheMindsetTraveller on 19/07/2021 - 12:26
    +1

    Why should we, I mean the average John and Jane taxpayer, fund more affluent John and Jane taxpayer?

    If a publicly listed company, usually owned by more affluent shareholders, wants to do community well or make money, then fund it themselves.

    Australia is in a trillion dollars worth of debt that you, me, and your grandchildren will be paying off.

    • GG57 on 19/07/2021 - 13:23

      I'm unsure who is promoting this though.
      Telstra may be being used by the government as an industry-aligned agent to try to have an influence.

  • Bid Sniper on 19/07/2021 - 12:35
    +5

    Telstra is a garbage company will charge taxpayers more than the market rate after subsidies. This is on par of privatizing power poles and wonder why our electricity bills have skyrocketed. LNP really needs to stop making things worse for Australians

    • SlavOz on 20/07/2021 - 12:04
      +1

      Given the government's incompetence at almost everything they do, I don't think I want them in charge of my electricity and heating.

      Keep in mind that limiting the country's reliance on government is one of the safest ways to protect against authoritarianism or misuse of power. Giving the government a free pass to run every part of your life is a bad idea.

      • Bid Sniper on 20/07/2021 - 13:39

        agree with our government being incompetent but disagree about authoritarianism or misuse of power. Private sector is exactly that why horrible companies like Telstra charge so much for trash service.

        • SlavOz on 21/07/2021 - 09:36

          Private sector is why there is a service to charge for in the first place. Almost every great piece of infrastructure or technology relies on innovations from the private sector.

          As for Telstra offering crappy service, it might have something to do with the fact that they still receive a lot of government funding. This tends to happen to every organisation that gets subsidised - see: ABC.

  • orangetrain on 19/07/2021 - 12:38

    (profanity) no, why Telstra, a private company? Give it to NBN, owned by taxpayers despite the rorts.

    At least if LNP sell off NBN to Telstra as part of their anti-competition/user track record, we will get some money back.

  • Lunarboogie on 19/07/2021 - 14:51

    Seems this is becoming a new way for governments to intervene in regions vulnerable to Chinese influence. The UK government recently won the contract to build Ethiopia's 5G network, thereby pipping Huawei - who had been the hot favourite - at the post.

    Yes, these interventions are expensive, but the inverse would be infinitely more expensive still. Would you like to be living alongside a Pacific region that has been completely honeycombed by the CCP? Not I. Our security would be hugely compromised and we'd lose strategic depth.

    This is a bold new move from Canberra and one that we ought to welcome.

    • GG57 on 19/07/2021 - 15:33

      Out of interest, could you expand on what the "inverse" would look like?
      Surely we, as a country, can live next to a country / region that might not be completely aligned with our values, etc. A lot of other countries in the world seem to be able to.
      If the CCP had a lot of influence in the countries of the Pacific, what are the matters of security that we should be concerned of?
      What is 'strategic depth'?

      • Lunarboogie on 19/07/2021 - 15:48
        +1

        Beijing would basically be control of the telecommunications network in our immediate region and potentially be able to hear every conversation we and NZ are having. If you think Huawei, ZTE and others are independent of the CCP, then you need to read more. Nothing is beyond the party's reach in China.

        Were this to occur, the investment then needed to counter the risk would dwarf the up front investment of $2 billion. Bear in mind also that this is a complex tie up, that includes under-writing debt. It may or not require any outlay - it's still very vague. It's the type of innovative public-private investments that we have made elsewhere, including in Indonesia. Besides, it will mostly come out of at the aid program anyway, so won't involve 'new' money.

        • GG57 on 19/07/2021 - 15:53

          Surely, as a country, we can secure our communications against others (other countries in the world seem to be able to) without making this 'investment'.
          If China is so good at this, and they probably are, do you not think that they can probably already do it (they don't need to be physically near to eavesdrop technology-wise)?

          I would much prefer that our government allocated aid money (and a lot more than currently allocated) towards things that would actually benefit the recipient countries, not just to 'protect' our interests.

          • Lunarboogie on 19/07/2021 - 16:07

            @GG57: This is now broadening into another issue of aid effectiveness. If you think international aid has made any difference, please show me the evidence. No country has developed on the back of aid. Countries grow from trade and economic diversification. Aid plays no part in this.

            This is not to say that aid doesn't have role in alleviating burdens on vulnerable communities - of course it does. But that is where it ends. The world has dropped billions of dollars in aid into Africa for example, and the continent is no closer to moving up the income chain. For many countries, it's gone backwards. You can replace Africa with PNG, Timor-Leste, yada yada yada and the results are the same.

            I know this may pierce the bubble that Australian tax dollars are somehow helping countries stand on their own two feet but if you read the literature, it's not. Elites and their cronies and overpaid development consultants are usually the only beneficiaries.

            So in some way, this new type of aid allocation may actually be more effective then the current model.

            • GG57 on 19/07/2021 - 16:14

              @Lunarboogie: I'm with you on your view of how the provision of 'aid' hasn't really helped anyone. And I've seen a few examples where it directly disadvantaged some people.

              Back to this story though; surely this is just a waste of taxpayer money, in the guise of aid, just to fight those naughty naughty Chinese.
              I can't see who could benefit from this, apart from the owners of Digicell.

  • GG57 on 19/07/2021 - 15:25
    -1

    More news coming out this afternoon:
    "senior figures within the government and the Department of Foreign Affairs and Trade are also concerned about the precedent set by a debt-laden company using the China threat to extract money out of Australian taxpayers"

  • Ryk on 20/07/2021 - 08:09

    why shouldn't Telstra run a run network in the pacific ? ANZ and Westpac have banking operations in the pacific too.

    • GG57 on 20/07/2021 - 10:16

      Financial institutions have representative offices worldwide, as part of their international trade and corporate businesses primarily. That is how the world of commerce works.
      Telstra could be involved in overseas businesses related directly to their core business.

      But this proposal includes a very large 'investment' by the Aust government, of taxpayer money. That is the difference.

  • menocheapsk8 on 20/07/2021 - 09:03
    +1

    It was the Federal Government who approached Telstra to push this deal. The Government gains by buffering China's sphere of influence and Telstra potentially benefits through an acquisition. Digicel is a healthy company returning healthy profits. I think it has the potential to benefits both sides. I just see as a modern form of defence spending; it's all about hearts and minds. At least we aren't buying outdated submarines or tanks.

    I think that China/CCP should be allowed the same opportunity to purchase the company if it so chooses. I respect the CCP for past achievements and I'm disappointed Australia has turned away from China. It would be much more constructive if we could focus on our similarities instead of trying to find differences.

    • GG57 on 20/07/2021 - 10:21

      Digicel has very large debts apparently; if it is making profits those must be going elsewhere.
      This could be seen as just a bad financial investment, and with the Fed government putting up the largest stake, that is taxpayer money at risk.

      Hearts and minds? - I don't think any consumers in those Pacific Island nations worry about who the owner of their mobile network is. They just want a reliable network at a good price.

      I agree that this looks and smells more like 'defence' spending than 'foreign aid'; maybe it just looks too obvious to take it from the defence budget.
      I also agree with how we should better work with other countries, instead of antagonising them at all costs.

  • Geoff01 on 20/07/2021 - 09:17
    +1

    Why is the govt investing in 3 and 4g. It's becoming redundant with the advent of 5g. Australia is always behind when it comes to technology but invest forward not backwards. Having just spent 13 years in the UK, coming back to Oz is like going back 10 years. I mean adsl is still a thing for God sake. Fast fibre is almost common place in most UK houses now.

    • GG57 on 20/07/2021 - 10:22

      A bad investment (using taxpayer money)?

  • AaronRain on 20/07/2021 - 09:24

    Isn't this the whole point of privatisation? Spend public money to build something up and then once it becomes profitable sale it off to private entity so that they can charge the public for something that we spent the money to build up?

    • GG57 on 20/07/2021 - 10:25

      Is this a good investment (of taxpayer money) though?
      Digicel has been in that business for a long time, and apparently wants to divest itself to clear debt. What would Telstra bring to the business to make it better, that Digicel hasn't?

      Walking away from the business in a few years, if it is not profitable etc., would be a diplomatic nightmare.

      • AaronRain on 21/07/2021 - 10:32
        +1

        Good investment for who? The taxpayer? Definitely not. So where does the money end up, as they says "Follow the money trail". The transfer of wealth would definitely end up somewhere.

  • OzHunterNSW on 21/07/2021 - 14:52
    +1

    No… once again this is simply full of US paranoia, and no doubt VASSAL Aust Got has been TOLD to stop China acquiring assets in the Pacific.

  • iridiumstem on 21/07/2021 - 15:06

    Probably political and/or military reasons (i.e. Chinese equipments and the backdoors risk).
    Probably something that makes little economical sense, but makes some sense in aforementioned reasons?

    I don't know, I think everyone have seen how China can use everything in its card to get a leverage against a country.
    We had our share of that with wine and iron. With China, I feel like they have and they will use anything, even if the measures will hurt them.

    The likely chances are, there are information that isn't available to public as well, so eh.

  • GG57 on 21/07/2021 - 15:31
    +1

    And today, Morrison was asked about this in a press conference and he deferred to Telstra's board to make the decision. Two problems with that:
    - The Telstra board would make their decision based on the availability of tax-payer money to support the Telstra business decision
    - The tax-payer money will probably come out of the overseas aid budget, so any good that we could be doing in developing countries would be reduced.
    And all because China is viewed as the big, bad enemy.

  • mini2 on 22/07/2021 - 14:48
    +1

    Hang on, so they're spending money to stop the Chinese from buying assets that are not even on our soil?

    They've got far bigger/closer to home problems like the port in Darwin!

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