25747 - Dialog II

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Summary of Proposed Investment

Project Number

25747

Company Name

TELEKOM MALAYSIA BERHAD

Date SPI Disclosed

Jun 25, 2007

Country

Sri Lanka

Industry

Telecommunications and Technology

Projected Board Date

Jul 26, 2007

Status

Completed

Sector

Mobile Telephony

Department

WBG Digital and AI

Environmental Category

C - No Impact

Previous Events

Approved : Aug 2, 2007
Signed : Sep 21, 2007
Invested : Sep 28, 2007

Project Description

The $676 million project consists of the nationwide expansion and upgrade of Dialog Telekom’s (Dialog or the company) GSM network in Sri Lanka as well as expansion of its business into broadband and pay TV services. Dialog Telekom is currently majority owned by TM International Sdn. Bhd. TM International Sdn. Bhd is a fully owned subsidiary of Telekom Malaysia Berhad (TM or the sponsor), which is the ultimate parent company of Dialog Telekom. In September 1993, Dialog was awarded a 20-year license to provide cellular telecommunications services as the result of a standard transparent application and award process by the Government of Sri Lanka (GoSL).

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	70.0
Equity	30.0

Development Impact

The telecommunications market in Sri Lanka has been growing in recent years, but the country still has a relatively low combined mobile and fixed penetration rate of about 35%. The project will have significant development impact by modernizing and expanding the telecommunications services in Sri Lanka. The project is expected to have the following specific development impacts: - Achieve 100% population coverage by 2008 (current level of population coverage is 90%); - Promote the economic development of the poorest and most remote areas of Sri Lanka, which currently have poor connectivity; - Maintain the existing subscriber acquisition momentum; - Expand broadband penetration which is now less than 1%; - Offer satellite TV service to 100% of the population, bringing news and information to areas previously without any TV service.

Dialog is undertaking one of the largest and most ambitious projects in Sri Lanka. IFC will provide long-term funding of up to 8 years in a politically uncertain environment where substantial long-term funding from local or international commercial banks is limited. Furthermore, the project would support South-South investments by assisting a Malaysian-based sponsor support its activities in surrounding frontier countries.

This is a Category C project according to IFC’s environment and social review procedure. The company will ensure that all operations comply with applicable IFC environmental and social policies and guidelines and with the environmental, health and safety laws of Sri Lanka. In addition, the company will provide IFC with an annual environmental and social monitoring report.

Contacts

For Inquiries About the Project, Contact

Mr. Munesh David, Manager – Corporate Finance Dialog Telekom Ltd. No. 475 Union Place, Colombo 02, Sri Lanka Telephone: 94-11-267-8700 Fax: 94-11-266-9704

For Inquiries and Comments About IFC, Contact

General IFC Inquiries IFC Corporate Relations 2121 Pennsylvania Avenue, NW Washington DC 20433 Telephone: 202-473-3800 Fax: 202-974-4384E Mail: Webmaster

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. It is not an offer of shares to the public and is intended solely to enhance the transparency of IFC’s activities. This document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC’s Policy on Disclosure of Information that went into effect April 30, 2006.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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