The Australian government reportedly entered talks with Telstra to acquire the Pacific operations of Digicel Group for AUD2 billion ($1.5 billion), in an effort to simultaneously lower the latter’s debt and soothe concerns the unit could end up in the hands of a Chinese company.

Citing a Telstra representative, The Sydney Morning Herald (SMH) claimed the company was originally approached by Australian authorities to assist with technical advice on Digicel Pacific before turning to discussions on a potential joint bid to acquire the division.

While restraining from indications whether it will pursue a transaction, Telstra reportedly described the unit as “a commercially attractive asset” which was crucial to telecoms services in the region.

It did note, however, any deal would involve funding and strategic risk management backing from the Australian government, alongside a condition for Telstra’s engagement to consist of a minor investment into the takeover.

SMH said financial terms discussed consisted of the country’s investment of more than AUD1.5 billion, while Telstra is set to pour between AUD200 million and AUD300 million.

The newspaper claimed the move was partly motivated by worries expressed by Australian security agencies over a potential scenario for the assets to be acquired by a Chinese company.

Digicel has been focused on restructuring its $5.4 billion debt after filing for Chapter 15 bankruptcy proceedings in the US in May 2020, and media reports on a potential sale of its Pacific assets, including to China Mobile, have been circulating ever since.