IFC Supported Satellite System to Provide Internet in Remote Areas
World Bank Group research shows that developing economies grow 1.38 percent for every 10 percent that broadband access is increased. Unfortunately, extending broadband in many regions is expensive and installing the proper infrastructure can be problematic. In Africa, for example, broadband is over 200 times more expensive than in the United States.
To help solve this problem IFC recently led a group of development institutions in providing $260 million in financing to help O3b Networks Ltd. complete a satellite system that will provide affordable broadband access to landlocked and remote developing countries near the Equator.
To make the O3b financing a reality, IFC played the role of co-arranger with AfDB for the development finance institutions’ $115 million senior debt facility and a $145 million mezzanine facility that included financing from DBSA, DEG, Proparco, FMO, and EAIF. As part of this financing package, IFC is providing a $10 million senior loan and $60 million in mezzanine financing from its own account.
O3b, which stands for the “other 3 billion,” refers to the nearly half of the world’s population that is not adequately served with broadband Internet access. Affordable high-speed broadband access provides people and businesses the opportunity to connect with each other, innovate, and grow their economies.
In its initial phase, O3b will use eight satellites that circle the Equator and provide broadband services for developing countries 45 degrees latitude north and south of the Equator. The satellites will serve countries in Africa, Asia, the Middle East, Europe, and South America. As demand grows more satellites will be added.
IFC has a long history of helping countries gain the telecommunications infrastructure needed to help attract foreign direct investment and lift people out of poverty. In 2008, IFC helped finance the Eastern African Submarine Cable System, which is providing broadband to eight African countries from South Africa to Sudan.