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| Millicom Cambodia |
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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 | 26365 |
| Company name | CamGSM Company Limited |
| Country | Cambodia |
| Sector | Information |
| Environmental category | B |
| Department | Global Inform. & Comm. Tech. |
| Status | Active |
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| Date SPI disclosed | December 6, 2007 |
| Projected board date | January 15, 2008 |
| Previous Events | Invested: March 25, 2009
Signed: July 31, 2008
Approved: May 23, 2008 |
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| View Environmental & Social Review Summary (ESRS), click here |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
| The project consists of the upgrade and nationwide expansion of a Cambodian GSM mobile network of CamGSM Company Ltd. (or the company). The company was granted its GSM license in 1996 for a period of 25 years, which was extended to 35 years in 1999. The company currently covers only 55% of the total population in the country. As part of its expansion, the company plans to install 400 new sites and additional microwave backhaul links in order to provide coverage to 75% of the population. |
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| Project sponsor and major shareholders of project company |
The company was founded in 1996 by Royal Millicom Co. Limited, a joint venture between Millicom International Cellular S.A., through Millicom Holdings Cambodia B.V. (61.5%), and the Royal Group of Companies (38.5%), a Cambodian based conglomerate.
Millicom Holdings Cambodia B.V is a 95% owned subsidiary of Millicom International Cellular S.A. Founded in 1990, Millicom International Cellular S.A. is a BB rated (S&P) global cellular telecom operator with a focus on low and middle income markets. The Sponsor currently has operations in 17 emerging market countries and a reputation as a strong, low cost operator. As of June 2007, Millicom had a worldwide subscriber base of 12.8 million. 2006 revenues were US$1.6 billion equivalent and EBITDA was US$717 million equivalent. Millicom is based in Luxembourg and has a dual listing on NASDAQ and the Stockholm Stock Exchange. Millicom has a market cap of US$9.4 billion equivalent as of July 13, 2007.
The Royal Group of Companies is a diversified group of businesses based in the Kingdom of Cambodia. The Group commenced business operations in 1990 and is focused on the development of infrastructure in Cambodia. In order to achieve its objective, the Royal Group has formed strategic alliances with several global partners. The Group has also set up joint ventures with ANZ Banking Group of Australia and the Oberoi hotel group. |
| Total project cost and amount and nature of IFC's investment |
| The project cost is estimated to be $141 million equivalent, mainly for capital expenditure. The proposed IFC investment is up to $40 million IFC A loan for IFC’s own account and up to $60 million B Loan for the account of participant banks. |
| Location of project and description of site |
| The headquarters for CamGSM is in Phnom Penh, Cambodia. The company plans to extend its current cellular network to provide mobile services throughout Cambodia. |
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| Anticipated development impact of the project |
By increasing the availability of telecommunications services in Cambodia, the project will:
- Improve Access.
The project will improve the availability of reliable and affordable communications for consumers and businesses. The Company conservatively projects mobile penetration to increase from about 16% to 46% by December 2012.
- Spur Competition.
The project will enhance competition in the sector, leading existing mobile operators to:
- invest further in their networks, thereby increasing availability and improving the quality of cellular services; and
- lower tariffs.
- Expand Geographic Coverage.
Although CamGSM is authorized to provide nationwide mobile service, geographic coverage is currently poor and limited to the main urban areas. Through this Project, the Sponsors plan to provide coverage to all major cities and as much remote area as is commercially viable, thus significantly increasing geographic and population coverage.
- Increase Employment.
The project will make available high quality jobs at the company, while creating quality employment opportunities in Cambodia in adjacent sectors, such as network construction and maintenance and mobile supplier/distribution.
- Support Local Companies/SMEs.
In addition to improving the overall reliability of telecommunications, CamGSM plans to expand data and internet access services directed to the business segment, thus enhancing the efficiency and competitiveness of these companies.
Demonstrate Successful FDI. Successful implementation of this project will signal to other potential foreign investors that infrastructure investments can be done in a transparent fashion, thereby encouraging further investment in the country. |
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| IFC's expected development contribution |
As a result, IFC’s contribution to this project will be high, as outlined below.
Provision of Long-Term Funding. IFC’s involvement ensures long-term funding in the volume and tenor needed for a Project of this scale in a frontier market such as Cambodia.
Mobilization. Given IFC’s knowledge of the telecommunications sector and its investment experience in East Asia, the Corporation will be mandated to mobilize additional funding from commercial banks in a B Loan syndication of US$60 million, the largest syndication to date in Cambodia.
Introduction of Mobile Banking and Village Phones. IFC would make available its expertise and support to help CamGSM roll out new services such as village phone and mobile banking, thereby expanding rural penetration and facilitating access to finance, and potentially providing assistance to their distribution network more broadly.
Infrastructure Development. IFC’s involvement will support the expansion of a network which will increase telecommunications usage nation-wide, improving the efficiency of the business sector and increasing connectivity between Cambodia and the global community. |
| Environmental and social issues - Category B |
| This project involves the upgrade and expansion of a cellular network, with construction and maintenance of cellular tower sites and construction and maintenance of office buildings, and warehouses. The key issues associated with the project are implementation of a policy and procedures for environmental, health, safety, and social management; and labor and working conditions, including employee and contractor occupational health and safety. The nature of the Company’s operations is such that no major adverse environmental or social impacts are expected to result from the project, and that it will be possible to avoid or mitigate any limited adverse impacts that might result. As a result, it has been classified as a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects. |
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| For inquiries about the project, contact: |
Camgsm Co., Ltd
33 Preah Sihanouk Blvd
P. O. Box 2468 Phnom Penh
Kingdom of Cambodia
Tel +855 12 800 800
Fax +855 12 801 801 |
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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 |
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