26295 - Digicel PNG

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Summary of Proposed Investment

Project Number

26295

Company Name

DIGICEL (PNG) LIMITED

Date SPI Disclosed

Jul 2, 2007

Country

Papua New Guinea

Industry

Telecommunications and Technology

Projected Board Date

Aug 2, 2007

Status

Completed

Sector

Mobile Telephony

Department

TMT, Venture Capital & Funds

Environmental Category

C - No Impact

Previous Events

Approved : Feb 27, 2008
Signed : Mar 10, 2008
Invested : Mar 27, 2008

Project Description

Digicel PNG (Digicel or the company) has obtained a mobile license in Papua New Guinea and plans the construction and operation of a nationwide GSM network. This greenfield project will introduce competition in a low penetration market, where the incumbent, Telikom PNG, currently exercises a monopoly over all fixed and mobile communication services.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	40.0
Equity

Development Impact

The project will offer a wide range of standard and value added mobile services; 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 1% and mobile penetration of 3%, Papua New Guinea ranks with the countries with the lowest tele-density worldwide. Further, telecommunication services in Papua New Guinea are expensive and coverage and quality are very poor.

The project will improve the access to reliable and affordable telecommunication services for consumers and businesses. The company projects that mobile penetration will more than triple by 2011.

The project will also support the telecom liberalization process of the Government of PNG. PNG began the process of liberalizing the telecommunication sector through the Telecoms Act of 1996 and the ICCC (Regulatory) Act of 2002. In April 2007, the ICCC granted two mobile licenses, one to Digicel and the other to Dawamiba, an Indonesian group.

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 PNG and the global community. Furthermore, through this project, IFC will support an existing client who has demonstrated a clear track record of positive developmental impact in all geographical areas it has entered.

This project is provisionally assessed to be a Category C according to IFC’s environmental and social review procedure. This classification is based on IFC’s long term relationship with the sponsor, and on the limited environmental and social impacts expected from the project, which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria.

The review of the project will consist of appraising the environmental and social information submitted by the company. The company and sponsor will be expected to implement Digicel’s corporate environmental and social management systems in PNG, to incorporate IFC and PNG social and environmental standards and to submit an annual environmental and social report to IFC.

Contacts

For Inquiries About the Project, Contact

Ron Goodfellow, CFO
Digicel (PNG) Ltd

Mobile: +695 697 2520
E-mail: ron.good.fellow@digicelgroup.com

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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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