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| Summary of Project Information (SPI) |
| This Summary of Project Information is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
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| Project number | 24662 |
| Project name | Areeba Afghanistan GSM |
| Country | Afghanistan |
| Sector | Information |
| Department | Global Inform. & Comm. Tech. |
| Company name | Areeba Afghanistan Limited |
| Environmental category | C |
| Date SPI disclosed | February 3, 2006 |
| Projected board date | March 3, 2006 |
| Date revised SPI disclosed | February 3, 2006 |
| Status | Pending Disbursement |
| Previous Events | Signed: June 30, 2006
Approved: June 23, 2006 |
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| Description of company and purpose of project |
Areeba Afghanistan (Areeba Afghanistan or the company) is an indirect subsidiary of Investcom LLC (Investcom or the sponsor). Areeba Afghanistan was awarded the third nationwide GSM license in Afghanistan in September 2005 for a license fee of $40.1 million. The license was awarded as the result of a competitive auction process that included five bidders and in which two winners were selected. The company has also been granted a license to operate its own international gateway.
The project consists of financing the license fee, network build-out, operating losses and working capital needs of the company for the period 2006-2009. The total estimated project cost is $130 million. IFC has been asked to provide financing in the aggregate amount of $45 million, which will include:
- an equity and
- a senior loan. |
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| Project sponsor and major shareholders of project company |
Areeba Afghanistan is wholly owned and managed by Investcom, an international provider of telecommunications services listed on the London and Dubai stock exchanges. Investcom has GSM mobile operations in eight countries in Africa, the Middle East and Europe (Ghana, Benin, Liberia, Guinea-Bissau, Sudan, Syria, Yemen and Cyprus), and offers an international carrier services through its Mednet subsidiary in Monaco. Investcom has a successful track record of earning significant returns in high risk environments and is currently poised to expand into Guinea and Afghanistan, two countries in which Investcom subsidiaries were recently awarded national mobile licenses.
Investcom is majority-owned and controlled by the Mikati family from Lebanon. On October 7, 2005 Investcom offered 23.7% of its shares on the London Stock Exchange and the Dubai International Financial Exchange. The offering valued Investcom at $3.3 billion equivalent. |
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| Total project cost and proposed IFC investment |
| Total project cost is estimated at $130 million. IFC investment should amount to $45 million. |
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| Location of project and description of site |
| The headquarters for Areeba Afghanistan is in Kabul, Afghanistan. The company plans to build a nationwide cellular network that will provide mobile services throughout Afghanistan. The mobile license awarded to Areeba Afghanistan requires the company to provide 50% coverage of Kabul within six months of commencing operation and 80% coverage of certain other major cities within the first year of operation. |
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| Project Development Impact and IFC's Role |
The project will have significant development impact to consumers, the population and the Government of Afghanistan. By increasing the availability of telecommunications services in Afghanistan, the project will:
- Expand access. The project will increase the availability of reliable and affordable telecommunications services for consumers, businesses and public agencies. Afghanistan’s mobile penetration rate of 3.5% (as of 9/2005) is among the lowest in the world.
- Extend geographic coverage. There is a pressing need to extend service to frontier areas within Afghanistan.
- Support telecom liberalization agenda. As indicated by the draft new telecommunications law, the Government of Afghanistan has committed to establishing best practices in telecommunications sector reform, including market liberalization in the mobile and fixed line sectors. This project will support private sector involvement in the telecommunications sector which is a goal of the government.
- Spur competition. The Afghan mobile market is currently a de facto duopoly. The entry of a third player into the market will help to establish the conditions necessary for increased competition.
IFC’s involvement in the project would provide long term funding in a priority frontier market in which private financing from local and international commercial banks is non-existent. Furthermore, Investcom is rapidly becoming a key regional telecommunications operator given its extensive African and Middle Eastern operations. This project will, therefore, not only support a sponsor from a developing region that is on track to becoming a global player, but also promote South-South capital flows by assisting Investcom to implement its strategy of investing in underdeveloped markets. |
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| Environmental and social issues - Category C |
As this is a Category C project according to IFC’s Procedure for Environmental and Social Review of Projects, a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria.
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| To contact the project company, please write to: |
Pascal Leccia, Senior Investment Officer
International Finance Corporation
Global Information and Communication Technologies Department
2121 Pennsylvania Ave. NW
20433 Washington, DC
USA
Tel: +1 202 473 3980
Pleccia@ifc.org |
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