Telstra acquires Digicel, Rio Tinto faces labour shortages and South32 sells base metal royalties to Anglo Pacific

Telstra (ASX: TLS) has announced it has completed a multibillion-dollar purchase of Digicel Pacific, a Pacific Islands telecommunications company.

The reliable industry leader has been backed with funding from the Australian government, providing US$1.33 billion (A$1.98 million) through Export Finance Australia (EFA).

Australia’s international development and the Pacific minister Pat Conroy said the telecommunications giant will offer its expertise in helping the region recover from tough economic times as a result of COVID-19.

“Telstra will be able to bring its extensive experience in the telecommunications sector to build on Digicel Pacific’s strong track record in support of economic development across the region,” he said.

Initially, the deal faced uncertainty after a tax dispute between Papua New Guinea (PNG) and Digicel threatened to stall the sale process.

PNG imposed a tax of almost $100 million which threatened to throw the sale to Telstra into jeopardy.

Digicel has since made arrangements to resolve the matter without Telstra being involved.

Digicel is the largest mobile phone carrier in the Pacific with roughly 2.8 million subscribers, with Telstra looking to add further stability as the region recovers from the pandemic.

Rio Tinto

Mining giant Rio Tinto (ASX: RIO) declared on Friday it is facing a labour shortage at its operations in Western Australia, warning rising inflation is set to impact underlying earnings in the second half.

With rising COVID-19 cases at its Pilbara operations leading to fewer workers, the company experienced a 2% drop in shipments of iron in the first half.

Rio warned weather events were also to blame.

Despite this, Rio has kept its full-year iron ore shipment guidance the same at between 320 million tonnes and 335Mt, with its Gudai-Darri mine in Pilbara set to continue to increase output with full capacity expected to be reached by 2023.

The lower figures come as mining companies across the globe lower annual production targets and increase expected costs, pinning the blame on inflation, COVID-19 lockdowns in China, and the impact of Russia’s war in Ukraine. 

ANZ

Banking giant Australia and New Zealand Banking Group (ASX: ANZ) has confirmed it is in talks with private equity company KKR & Co to buy software MYOB Group, for an estimated $4.5 billion.

The news comes as the major banks continue to divest non-core operations to simplify business and focus on lending.

KKR bought MYOB for $1.6 billion in 2019, making it one of the biggest acquisitions at the time.

Experts believe the price ANZ are paying to acquire MYOB is too much.

Morningstar analyst Nathan Zaia said ANZ’s money would have been more useful being spent elsewhere, insisting the capital spend is too much, “especially buying a business from private equity.”

Mr Zaia stated ANZ is attempting to win market share in small and medium enterprises (SME) lending through an integrated banking and accounting offering, despite the fact there are less capital-intensive ways of doing so.

South32

South32 (ASX: S32) has entered into a binding agreement for the sale of a package of four non-core base metal royalties to Anglo Pacific Group.

The Perth-based mining company will sell the package to the London Stock Exchange listed company for up to US$200 million (A$285 million).

The royalties package largely involves copper and nickel projects in Australia, the United States and Chile.

Part of the US$200 million deal includes US$103 million in cash payments and US$82 million of Anglo Pacific shares, meaning South32 will acquire a 16.9% interest in Anglo.

South32 chief executive officer Graham Kerr said the deal is exciting for the company and a great opportunity.

“Today’s sale of another non-core royalty package is a further step forward in unlocking latent value from our portfolio,” he said.

“The proposed transaction will realise an immediate cash payment, while also retaining long-term exposure to these royalties through our shareholding in Anglo Pacific.

“Following the sale, we still retain an exciting package of 36 royalties at different stages of maturity, weighted towards base metals,” he added.

Worley

Worley (ASX: WOR) has emerged in the news headlines for a second time this week after it announced it was granted a front-end engineering design (FEED) contract with Mistubishi Heavy Industries and Tecnicas Reunidas.

The three companies will come up with a plan for what is expected to become Scotland’s first carbon capture-enabled power plant at Peterhead.

The carbon capture power station will have a generating capacity of up to 910 megawatts and connect into the Scottish Cluster’s carbon storage infrastructure.

It will help in efforts to decarbonise power generation, capturing 1.5 million tonnes of carbon, marking 5% of the UK government targets for 2030.

Worley president Bradley Andrews said the project will help in decarbonisation efforts moving forward.

“This project will produce flexible and clean power allowing further renewable generation while reducing carbon emissions at scale,” he said.

“It’s a landmark project for Scotland in its ambitions to help decarbonise industrial clusters in the UK – and it supports our efforts in delivering a more sustainable world.”