Maroc Telecom acquired 51% of Onatel on December 29, 2006, in an open and transparent bidding process with a bid of Euro 220 million ($295 million equivalent). The Government of Burkina Faso owns the remaining 49%. Maroc Telecom is the leading global telecommunications operator in Morocco and the second largest incumbent in Africa, after Telkom South Africa. Maroc Telecom is majority owned by Vivendi Universal (51%), with the Government of Morocco holding a 34% stake. The remaining 15% has been floated on the Casablanca and Paris stock exchanges.

The total project cost is estimated at Euro75 million. The proposed IFC investment is a senior loan for its own account up to Euro8 million and an equity investment up to Euro23 million.

41.98 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	11.79
Equity	30.20

* These investment figures are indicative

The project will be headquartered in Burkina Faso and will provide fixed and mobile telecommunication services, as well as internet access, to both urban and rural areas of the country.

The project will offer a wide range of standard and value added fixed and mobile services in Burkina Faso. Given the poor state of the existing telecommunications infrastructure in the country, the project will have a significant development impact for both individuals and businesses. With fixed line penetration of slightly more than 0.7% and mobile penetration of 4.3%, Burkina Faso ranks with the countries with the lowest tele-density worldwide. The project will improve access to reliable and affordable telecommunication services for consumers and businesses. The company projects that fixed and mobile penetration will increase to 1.4% and 28% respectively by 2011. The project will also support the telecom liberalization process of the Government of Burkina Faso. Burkina Faso started liberalizing its telecommunications sector in 1991 with the help of the World Bank. In 1998 a new telecom law was enacted and the regulatory agency (ARTEL) was created. The private sector has entered Burkina Faso’s mobile sector in 2000 (Telecel) and in 2001 (Celtel). The privatization of Onatel in December 2006 and the opening up of the fixed sector to competition are the latest steps towards full sector liberalization.

By supporting the project, IFC will provide long term financing in a priority frontier market in which private financing from local or from international commercial banks without multilateral support is scarce. IFC’s investment in the project will also help an emerging competitive telecommunications market develop, improve the efficiency of the business sector and increase connectivity between Burkina Faso and the global community. Furthermore, through this project, IFC will be promoting South-South investment and will be developing a relationship with a strong regional operator, Maroc Telecom, who has demonstrated a clear track record of positive developmental impact in all geographical areas it operates.

IFC''s early review of this investment has identified the following environmental, social, health and safety issues:

- the company''s management system for environmental, health and safety issues;
- tower siting and land use issues;
- compliance with national, local, and IFC standards;
- impacts on environmentally or culturally sensitive areas;
- storage, treatment and disposal of hazardous material (e.g., fuel oil, PCBs and CFCs including Halons); and
- fair, safe and healthy working conditions.

Based on this early review, it is anticipated that this project will require 30 days disclosure by IFC prior to Board and has been provisionally categorized as B.