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| Digicel Papua New Guinea II |
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| Summary of Proposed Investment |
| This Summary of Proposed Investment 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. |
| Project number | 28398 |
| Company name | Digicel (PNG) Limited |
| Country |
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| Sector | Mobile Telephony |
| Environmental category | C |
| Department | Reg Ind, Infra & Nat Res, ASIA |
| Status | Active |
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| Date SPI disclosed | June 29, 2009 |
| Projected board date | July 30, 2009 |
| Previous Events | Invested: November 23, 2009
Signed: September 29, 2009
Approved: September 17, 2009 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
| The project consists of the expansion of Digicel (PNG) Limited’s current GSM cellular telephone network in Papua New Guinea, where it was granted a mobile license in 2007. This expansion project will continue to drive competition in a relatively low penetration market and provide cellular telephone services to areas that currently have no mobile, fixed or internet services. |
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| Project sponsor and major shareholders of project company |
| The project’s main sponsor is Mr. Denis O’Brien, who owns a majority stake in Digicel Pacific Limited (the sponsor), a privately-held, international company. The sponsor is a sister company of Digicel Limited, an international provider of mobile telecommunication services in 23 Caribbean markets and in El Salvador, Central America. Since commencing operations in Jamaica in April 2001, Digicel has become the largest GSM operator in the Caribbean and distinguishes itself through competitive tariffs and superior quality and service. The other shareholders in Digicel Pacific are Mr. Leslie Buckley, and Directors and staff. |
| Total project cost and amount and nature of IFC's investment |
| The total project cost is estimated at approximately $294 million. The proposed IFC investment is a senior loan for its own account up to $80 million. |
| Location of project and description of site |
| The project will be headquartered in Papua New Guinea, and will provide mobile telecommunication services to both urban and rural areas of the country. |
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| Anticipated development impact of the project |
The project will offer a wide range of standard and value added mobile services; given the penetration level of existing telecommunications infrastructure in the country, the project will have a significant development impact for both individuals and businesses. With fixed line penetration of slightly more than 1% and mobile penetration of 18%, Papua New Guinea still ranks with the countries in the low end of the tele-density scale worldwide.
The project will improve the access to reliable and affordable telecommunication services for consumers and businesses. The company projects that mobile penetration will continue to grow to 25% by 2012.
The project will also continue to support the telecom liberalization process of the Government of PNG. PNG began the process of liberalizing the telecommunication sector through the Telecoms Act of 1996 and the ICCC (Regulatory) Act of 2002. In April 2007, the ICCC granted two mobile licenses, one to Digicel and the other to Dawamiba, an Indonesian group. In February 2008, the National Executive Council (“NEC”) approved the National ICT Policy 2008 (“ICT Policy”) as PNG Government Policy. The 2008 ICT Policy, primarily drafted to increase competition in the telecommunication industry, set out a two-phased approach with phase-1 as a transition period for a gradual introduction of open competition and phase-2 as an implementation period for prescribed, approved telecom sector reforms. On March 31, 2009, NEC approved the National ICT Policy Phase-2 Reforms – Final Report. |
| IFC's expected development contribution |
| By supporting the project, IFC will provide long term financing in a priority frontier market in which private financing from local or from international commercial banks without multilateral support remains a challenge. IFC’s investment in the project will also help an emerging competitive telecommunications market develop, improve the efficiency of the business sector and increase connectivity between PNG and the global community. Furthermore, through this project, IFC will support an existing client who has demonstrated a clear track record of positive developmental impact in all geographical areas it has entered. |
| Environmental and social issues - Category C |
| At appraisal, IFC reviewed information relating to IFC's previous investment in Digicel PNG as well as new due diligence information. Under IFC's first investment, the company started implementing an environmental and social management system to ensure compliance with IFC Performance Standards, which has been achieving satisfactory performance. The company is planning no construction at any sensitive site in the next three years. Under IFC's proposed new investment, the company would commit to maintaining its environmental and social management system, continuing to submit annual monitoring reports to IFC, and adding secondary containment around fuel tanks according to a plan that shall be consistent with both industry and IFC standards. To reflect minimal new environmental or social risk under IFC's proposed new investment, the project has been classified as Category C according to IFC's environmental and social review procedure. |
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| For inquiries about the project, contact: |
John Mangos, CEO – Digicel PNG
Digicel (PNG) Ltd
PO Box 1618 Port Moresby,
NCD, PNG
Telephone: +675-7222-2222
E-mail: John.Mangos@digicelgroup.com |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
| Local access of project documentation |
John Mangos, CEO – Digicel PNG
Digicel (PNG) Ltd
PO Box 1618 Port Moresby,
NCD, PNG
Telephone: +675-7222-2222
E-mail: John.Mangos@digicelgroup.com |
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