The Project has an Anticipated Impact Measurement and Monitoring (AIMM) rating of Satisfactory.

Project Outcomes: Increased access to quality broadband Internet for individuals and businesses. Based on the standalone capex plan to upgrade mobile and fixed network, a preliminary assessment suggests "Strong" Project Outcomes, with a risk of a Moderate rating if savings are not reinvested or if there is no addition with respect to the current capex plan. The gap in access to quality broadband Internet in Armenia is expected to be Medium as, compared to other emerging markets, penetration and download speed of fixed or mobile broadband is on par with regional or income-group averages. Without the refinancing component, the Company may not be able to expand beyond its historical investment trend. The refinancing is expected to generate savings that, if reinvested, can support network expansion and upgrade as well as expand international connectivity. The magnitude of these outcomes will be explored in appraisal and depends on: the degree of commitment to reinvest the savings, and how these will be invested; and the incremental nature of this investment compared to the existing capex plan.

Market Creation - Subject to evidence about the expected increase in high-speed broadband coverage beyond the Company, a preliminary assessment suggests "Moderate" Contribution to Market Creation. Increased integration by strengthening international connectivity linkages or enabling digital platforms may be considered post appraisal. Increased competitiveness of the market for broadband Internet access by preserving trends in network upgrade via innovation and competition channels. The market for broadband Internet access in Armenia is fairly developed with a number of large fixed and mobile broadband operators providing affordable service within an effective regulatory framework. However, technological innovation remains limited beyond the market leader as other operators mainly rely on legacy technologies (3G and ADSL). By supporting an expansion of 4G and fiber-optic network by the Company, this investment has the potential to maintain competitive pressure on other market players to continue upgrading their networks, thereby preserving the trends in broadband quality improvement in the Armenian broadband sector.

IFC’s Additionality in this project is both financial and non-financial. provide an A loan of up to US$15-20 million with 5-7-year tenor and 18-month grace period to support the capex and refinancing of the Company in Armenia, a country with limited availability of credit under similar terms, especially amid a political instability and the COVID-19 crisis. IFC's investment will provide access to a more affordable term loan that will enable the Company to free up cash for its capex plan.

Non-financial additionality in the form of non-commercial risk mitigation may be explored post appraisal subject to more evidence about specific country risks IFC is mitigating for other lenders.

This is a Category B project according to IFC’s Policy on Environmental and Social Sustainability. Based on information reviewed by IFC, the proposed project is expected to have limited adverse E&S risks and impacts that are few in number and site-specific, and readily addressed through existing mitigation measures and good international industry practices (GIIP) as described in the following sections.

Key E&S issues associated with the project are: (i) development and implementation of a corporate E&S management system (ESMS) and relevant procedures and plans to assess and manage the limited adverse E&S risks and impacts in line with IFC Performance Standards (PSs) during operations, network upgrades and potential expansion and acquisitions, including management of right-of-way and land access; (ii) labor and working conditions including OHS management during operations and maintenance (O&M) and network upgrade works (e.g. ground disturbance, excavation, electrical safety, vehicle movement etc.); (iii) emergency preparedness and response, including for COVID-19 pandemic; (iv) solid and hazardous wastes, hazardous material management, visual impacts, electric and magnetic fields (EMF); (v) community health and safety including infrastructure safety, road safety and L&FS in the retail stores; (vi) security management; (vii) stakeholder engagement and grievance mechanism.