SYDNEY, AAP – The federal government is playing up its partnership with Telstra to buy a South Pacific mobile and broadband company as a sign of its commitment to the region.

The government, through Export Finance Australia, will pay most of the $US1.6 billion ($A2.1 billion) purchase price of Digicel Pacific.

Telstra is putting in $US270 million, with the government financing arm tipping in $US1.3 billion through a combination of debt and other securities.

In a joint statement, Foreign Minister Marise Payne, Trade Minister Dan Tehan and International Development and Pacific Minister Zed Seselja said the government expected to see a long term return from the deal.

“The acquisition also reflects the government’s commitment … to support the development of secure and reliable infrastructure in the region,” the ministers said on Monday.

Chinese operators, including China Mobile, had also expressed interest in the business started by Irish billionaire Denis O’Brien, who will sit on the new board.

“It’s a tribute to Australia’s commitment to the Pacific,” said Senator James Paterson, who also chairs a parliamentary intelligence and security committee.

“One of the key things about this agreement is that it demonstrates that Australia does so for the benefit of our friends and family in the Pacific, and unlike some other operators in the Pacific, we do so without any strings attached.”

Telstra will own 100 per cent of Digicel Pacific upon the completion of the acquisition by mid-next year.

Chief executive Andy Penn said Telstra had considered acquiring the business after first being approached by the government last year to provide technical advice.

“We previously said that if Telstra were to proceed with a transaction it would be with financial and strategic risk management support from the government,” he said in a statement on Monday.

Telstra was also seeking to ensure its part of the investment would be the minor portion.

“I am pleased that we have been able to achieve both of those outcomes,” Mr Penn said.

Telstra could provide a further $US250 million, subject to the performance of the business over the next three years.

Digicel Pacific is part of the Digicel Group, which began providing mobile and broadband services in the Caribbean in the 2000s before expanding to the Pacific.

Digicel Pacific now supplies Papua New Guinea, Tonga, Fiji, Nauru, Samoa and Vanuatu and has about 2.5 million subscribers and 1700 employees.