32532 - VMLA - Colombia

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Summary of Investment Information

Project Number

32532

Company Name

VIRGIN MOBILE COLOMBIA S A S

Date SPI Disclosed

Oct 10, 2012

Country

Colombia

Region

Latin America and the Caribbean

Projected Board Date

Nov 9, 2012

Environmental Category

C - No Impact

Status

Completed

Last Updated Date

Jan 10, 2025

Department

Regional Industry INF LAC & EUR

Industry

Telecommunications and Technology

Previous Events

Approved : Dec 11, 2012
Signed : Dec 14, 2012
Invested : Mar 18, 2013

Sector

Mobile Telephony

Project Description

Virgin Mobile Latin America (the “Sponsor” or “VMLA”) has Mobile Virtual Network Operator (“MVNOs”) licenses in Chile, Colombia, Mexico and Peru, and has filed for license in Uruguay, Bolivia, Brazil and Argentina.

IFC will be providing a financial package of up to US$14 million to fund Virgin Mobile Colombia (“VMCO” or “the Company”). VMCO will be offering mobile phone services primarily to the youth segment, with a targeted offering that will expand mobile broadband usage with attractive data packages.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	14.0
Equity

Development Impact

1) Innovation/Demonstration Effect: MVNOs are relatively new in LAC. Through this innovative business model the whole mobile ecosystem benefits (i.e., MVNOs, MNOs, technology providers, and most importantly, the consumer). The MVNO model allows for a deeper penetration of services (i.e., including mobile broadband, etc.) as poorly attended client niches (i.e. youth in the case of Virgin) obtain a well targeted service offering more aligned to its needs and expectations.
2) Broadband / Productivity enhancement: VMLA offers a data centric service offering. Broadband directly contributes towards improving productivity. The contributions of broadband connectivity to economic growth, and as a kick-starter of other innovative business models (e-health, e-education, e-commerce, etc.), is widely accepted.
3) Infrastructure Sharing: Infrastructure sharing (i.e., including towers) is a key theme in IFC''s TMT sector strategy. The concept behind MVNOs is the sharing of existing telecoms infrastructure, thus maximizing efficency, increasing competition and reducing prices. The owner of the core infrastructure (i.e., MNOs) also benefits as it revenues increases by selling additional minutes and data wholesale. Moreover, the fact of leveraging on existing infrastructure makes this investment a "climate friendly" project. MVNOs have no substantial infrastructure or facilities, so they are unlikely to create E&S risk.
4) Availability, Affordability & inclusion of underserved markets: MVNO contributes to expending the reach of underserved population segments, lowering the cost and increasing competition in mobile telephony.
5) Youth: VMLA directly targets the youth segment. Youth in general have a lower purchasing power than other population segments, and thus, a targeted and relevant service offer contributes directly to attending this segment''s needs.

1) Long term financing across the region: MVNOs entrants face difficulties in raising non-recourse financing for Greenfield operations. Traditional financiers do not fully understand the MVNO business model. IFC support is critical, as fundraising is particularly challenging in the current context of global financial volatility.
2) Stamp of Approval: Sponsor sees significant value in IFC''s involvement, as a way of further validating the business model after IFC''s involvement in its first regional launch (Chile). IFC participation will provide comfort to other investors.
3) Support an existing client to expand across LAC: VMLA has already launched in Chile and plans to deploy its MVNO business in 7 additional countries, including Colombia and Brazil.
4) Mobilization: Funding of Colombia operations might imply attracting co-investors. IFC capability of mobilizing financial institutions will help to achieve financial plan completion.

E&S Category Rationale / Risks and Mitigation

Contacts

For Inquiries About the Project, Contact

Peter Macnee
President & CEO VMLA

Lynex Chambers
PO Box 4408
Road Town
Tortola VG1110
British Virgin Islands
Telephone: +1-201-248-4465
Fax: n/a
Email: mailto:peter.macnee@virginmobilelatam.com

Guillermo Mulville (Team Leader)
Principal Investment Officer - IFC
Tel: +54.11.4114.7206
Email: mailto:gmulville@ifc.org

Pablo Piffaretti (Transaction Leader)
Associate Investment Officer - IFC
Tel: +1.202.458.9336
Email: mailto:ppiffaretti@ifc.org

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