Telstra has confirmed rumours it is looking to expand its footprint into the South Pacific with a potential $2 billion acquisition.

The company responded to a report in The Age and The Sydney Morning Herald claiming it was interested in acquiring telco Digicel Pacific, acknowledging that talks are in progress but stressing there is “no certainty” a transaction will go ahead.

“Telstra was initially approached by the Australian Government to provide technical advice in relation to Digicel Pacific, which is a commercially attractive asset and critical to telecommunications in the region.

“If Telstra were to proceed with a transaction it would be with financial and strategic risk management support from the Government,” said Telstra in an ASX statement.

Should it go ahead, the move – backed by more than $1.5 billion in Commonwealth funding, the Nine papers report – will see Telstra gain a foothold in Papua New Guinea, Fiji, Nauru, Samoa, Tonga and Vanuatu, in what is speculated to be an effort to keep Digicel’s assets out of Chinese hands.

Digicel was founded in 2006 by Irish magnate Denis O’Brien, and generated an EBITDA of $US235 million in the 2020 calendar year. According to Nine’s sources, the deal would see O’Brien sit on Digicel Pacific’s board.