34291 - Virgin Mobile Central & Eastern Europe

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Summary of Investment Information

Project Number

34291

Company Name

Virgin Mobile Central and Eastern Europe (BeMyMobile Ltd.)

Date SPI Disclosed

Nov 12, 2013

Country

Eastern Europe Subregion

Region

Europe

Projected Board Date

Dec 13, 2013

Environmental Category

C - No Impact

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Regional Industry INF LAC & EUR

Industry

Telecommunications and Technology

Previous Events

Approved : May 14, 2014
Signed : Jul 16, 2014
Invested : Sep 9, 2014

Sector

Mobile Telephony

Project Description

BeMyMobile Ltd (“VMCEE” or the “Company”) is an early stage, mobile virtual network operator (“MVNO”) with plans to provide mobile telephony services across Eastern Europe and Central Asia. VMCEE launched operations in Poland in August 2012 and plans to launch in Turkey during 2014. To this end, the Project consists of supporting VMCEE in the build-out and launch of its operations in Poland and Turkey. In the future, Russia and Kazakhstan could also be considered.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	13.83

Development Impact

1) Greater availability, affordability & accessibility of mobile services: VMCEE and (Mobile Virtual Network Operator -"MVNOs" in general) contribute toward lowering the cost and increasing competition in mobile telephony. VMCEE''s data centric product offering will support further expansion of mobile broadband, targeting underserved niche markets by traditional Mobile Network Operators ("MNOs") such as lower income population in rural areas and the youth market with limited purchasing power.
2) Improved productivity through broadband connectivity: VMCEE''s data centric offering contributes to improved productivity through greater broadband connectivity. The broadband connectivity is widely recognized to be a catalyst for innovative business models such as e-health, e-education, e-commerce, etc, directly contributing to economic growth.
3) Increase competition and maximize efficiency: VMCEE will operate over existing telecoms infrastructure, allowing MNOs owner of the core infrastructure to sell excess minutes and data usage, thus maximizing efficiency and increasing price competition through improved cost structure. The MNOs owner of the core infrastructure benefits by selling additional minutes and data wholesale. VMCEE (and MVNOs generally) are fully aligned with the regulator''s objective of increasing competition in the target markets.
4) Job creation for youth: VMCEE will operates through extensive networks of SME dealers, distributors and franchises, thus creating job opportunities especially for young and skilled labor force who are attracted to the Virgin brand and the associated brand image.

1) Long term financing: As a greenfield, VMCEE (and MVNOs generally) face the challenge of raising non-recourse financing. Traditional financiers do not fully understand the MVNO business model, and the asset light balance sheet does not provide required collateral. Thus, IFC support is critical.
2) Stamp of Approval: MVNOs are common in Western Europe and US, but the MVNO business model is relatively undeveloped in CEE with a MVNO market penetration of below 1%. As such, new entrants in CEE face difficulties in raising financing for greenfield operations. IFC involvement in the project will assist in validating the business model to other investors, allowing future mobilization of resources to this industry segment.
3) Knowledge Sharing: VMCEE sees value in a partner with deep telecoms experience and who can understand the MVNO business model and recognizes its potential in Central & Easter Europe. In addition, IFC will provide sector expertise and regional knowledge.

E&S Category Rationale / Risks and Mitigation

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