Vocus chief executive Kevin Russell.Credit:Steven Siewert
The deal,announced this week,requires approval from the Foreign Investment Review Board (FIRB). The CIC,which was set up in 2017,provides FIRB with more advice during a review of an offshore takeover if a foreign company wants to buy critical infrastructure including electricity,gas and water,that could impact national security.
Telecommunications often falls into this category with the thousands of kilometres of undersea cables connecting Australia with the rest of the world considered particularly significant and a target of espionage.
The governmentstepped in last year to stop Chinese telco giant Huawei from participating in the build of the undersea Coral Sea Cable System. Vocus was instead contracted to build the $136.6 million project after the Australian authorities agreed to pay for half of the project. These cables connect the Solomon Islands and Papua New Guinea with Australia via Sydney.
Vocus also constructed the Australia Singapore Cable that became operational in 2018.
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The telco this week confirmed it had received a non-binding,indicative proposal from EQT Infrastructure to acquire its operations for $5.25 per share,in a deal that would value Vocus at $3.3 billion. Vocus shares on Tuesday closed 13 cents,or 2.9 per cent,higher at $4.68.
Well-placed sources believe any eventual deal will be able to overcome any scrutiny from the CIC,particularly as other Swedish companies are heavily involved in sensitive local telco infrastructure builds. This includes Stockholm-headquartered Ericsson,which provides equipment for Telstra's ultra-fast 5G mobile network build after the government banned companies like China's Huawei and ZTE from participating in the same rollouts on security grounds.