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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.
Telecom Samoa Cellular Limited
Date SPI disclosed
October 16, 2006
Projected board date
November 17, 2006
Invested: February 27, 2007
Signed: February 14, 2007
Approved: January 22, 2007
Digicel Pacific Limited (Digicel Pacific or the sponsor) is a sister company of Digicel Limited, an international provider of GSM telecommunications services with operations in twenty-two countries throughout Latin America and the Caribbean including Anguilla, Antigua & Barbuda, Aruba, Barbados, Bermuda, Bonaire, the Cayman Islands, Curacao, Dominica, French Guyana, Grenada, Guadeloupe, Haiti, Jamaica, Martinique, St. Kitts & Nevis, St. Lucia, St. Vincent & the Grenadines, Trinidad & Tobago and Turks & Caicos. Since commencing operation in Jamaica in April 2001, Digicel has become the largest GSM operator in the Caribbean region and continues to distinguish itself from incumbents through competitive tariffs as well as superior quality, functionality and service.
The project consists of financing the acquisition and nationwide build-out of a GSM digital mobile telephony network in Samoa, sponsored by Digicel Pacific. The project will be implemented by Telecom Samoa Cellular Limited (TSCL or the Project Company). Digicel Samoa Limited (a subsidiary of Digicel Pacific) has acquired 90% of TSCL from Telecom NZ.
Project sponsor and major shareholders of project company
The project’s main sponsor is Denis O’Brien, who owns a majority stake in Digicel Pacific. He has had a variety of successful experiences with telecommunications projects worldwide. Most notable of these are Digicel’s current operations in the Caribbean, and his highly competitive telecommunications business in Ireland called Esat, which was ultimately acquired by British Telecom for $2.5 billion in 2001. The other shareholders in Digicel Pacific are Mr. Leslie Buckley, Directors and Staff.
Total project cost and amount and nature of IFC's investment
The total project cost is estimated at approximately $41.6 million. The proposed IFC investment is a $10.8 million senior loan for IFC’s own account.
IFC investment as approved by Board
8.15 million (USD)
IFC Investment (million USD)
* These investment figures are indicative
Location of project and description of site
The project will be headquartered in Samoa and will provide GSM services to both urban and rural areas of the country.
Anticipated development impact of the project
The project involves the rollout of a nationwide GSM cellular network in Samoa, offering a wide range of standard and value-added mobile services.
Given the poor state of existing telecommunications infrastructure, the project will have a significant development impact to both individuals and businesses in Samoa. Mobile telephone density is 17.2 per 100 inhabitants, which ranks it fourth among the islands in South Pacific region. Further, telephony in Samoa remains expensive and is accompanied by poor coverage and quality.
By increasing the quality and availability of telecommunications services in Samoa, this project will improve the availability of reliable and affordable communications for consumers and businesses. With the entry of Digicel, the company projects mobile penetration in Samoa should more than double from 17.2% to 37% by FY07.
The project will also support the telecom liberalization process of the Government of Samoa. Samoa began the process of liberalizing the telecommunications sector in 1999. Since that time, only one mobile operator has since been present in the market. This Project will further enhance the quality of service offered to consumers, which is a goal of the Government.
IFC's expected development contribution
By supporting this Project, IFC will provide long term funding in a priority frontier market in which private financing from local and international commercial banks is scarce. IFC’s investment in the new network will also help an emerging competitive market to develop, increasing telecommunications usage nation-wide, improving the efficiency of the business sector and increasing connectivity between Samoa and the global community. Furthermore, through this Project, IFC is also supporting a former client, Digicel, who has demonstrated a clear track record of improving the regional economy, promoting regional integration and improving global competitiveness commitment to geographic area in which it enters (as can be seen from its Latin American and Caribbean regional strategy).
Environmental and social issues - Category C
This project is provisionally assessed to be Category C according to IFC's environmental and social review procedure, based on IFC's long-term relationship with the sponsor, and because there are limited environmental and social impacts which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project will consist of appraising environmental and social information submitted by the sponsor. The sponsor will be expected to implement Digicel's corporate environmental and social management system in Samoa, incorporating IFC and Samoan social and environmental standards, and provide IFC annual environmental/social reports.
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