26365 - Millicom Cambodia

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Summary of Proposed Investment

Project Number

26365

Company Name

CamGSM Company Limited

Date SPI Disclosed

Dec 6, 2007

Country

Cambodia

Industry

Telecommunications and Technology

Projected Board Date

Jan 15, 2008

Status

Completed

Sector

Mobile Telephony

Department

WBG Digital and AI

Environmental Category

B - Limited

Previous Events

Approved : May 23, 2008
Signed : Jul 31, 2008
Invested : Mar 25, 2009

Project Description

The project consists of the upgrade and nationwide expansion of a Cambodian GSM mobile network of CamGSM Company Ltd. (or the company). The company was granted its GSM license in 1996 for a period of 25 years, which was extended to 35 years in 1999. The company currently covers only 55% of the total population in the country. As part of its expansion, the company plans to install 400 new sites and additional microwave backhaul links in order to provide coverage to 75% of the population.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	60.0
Equity

Development Impact

By increasing the availability of telecommunications services in Cambodia, the project will:

- Improve Access.

The project will improve the availability of reliable and affordable communications for consumers and businesses. The Company conservatively projects mobile penetration to increase from about 16% to 46% by December 2012.

- Spur Competition.

The project will enhance competition in the sector, leading existing mobile operators to:

- invest further in their networks, thereby increasing availability and improving the quality of cellular services; and
- lower tariffs.

- Expand Geographic Coverage.

Although CamGSM is authorized to provide nationwide mobile service, geographic coverage is currently poor and limited to the main urban areas. Through this Project, the Sponsors plan to provide coverage to all major cities and as much remote area as is commercially viable, thus significantly increasing geographic and population coverage.

- Increase Employment.

The project will make available high quality jobs at the company, while creating quality employment opportunities in Cambodia in adjacent sectors, such as network construction and maintenance and mobile supplier/distribution.

- Support Local Companies/SMEs.

In addition to improving the overall reliability of telecommunications, CamGSM plans to expand data and internet access services directed to the business segment, thus enhancing the efficiency and competitiveness of these companies.
Demonstrate Successful FDI. Successful implementation of this project will signal to other potential foreign investors that infrastructure investments can be done in a transparent fashion, thereby encouraging further investment in the country.

As a result, IFC’s contribution to this project will be high, as outlined below.

Provision of Long-Term Funding. IFC’s involvement ensures long-term funding in the volume and tenor needed for a Project of this scale in a frontier market such as Cambodia.

Mobilization. Given IFC’s knowledge of the telecommunications sector and its investment experience in East Asia, the Corporation will be mandated to mobilize additional funding from commercial banks in a B Loan syndication of US$60 million, the largest syndication to date in Cambodia.

Introduction of Mobile Banking and Village Phones. IFC would make available its expertise and support to help CamGSM roll out new services such as village phone and mobile banking, thereby expanding rural penetration and facilitating access to finance, and potentially providing assistance to their distribution network more broadly.

Infrastructure Development. IFC’s involvement will support the expansion of a network which will increase telecommunications usage nation-wide, improving the efficiency of the business sector and increasing connectivity between Cambodia and the global community.

This project involves the upgrade and expansion of a cellular network, with construction and maintenance of cellular tower sites and construction and maintenance of office buildings, and warehouses. The key issues associated with the project are implementation of a policy and procedures for environmental, health, safety, and social management; and labor and working conditions, including employee and contractor occupational health and safety. The nature of the Company’s operations is such that no major adverse environmental or social impacts are expected to result from the project, and that it will be possible to avoid or mitigate any limited adverse impacts that might result. As a result, it has been classified as a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects.

Contacts

For Inquiries About the Project, Contact

Camgsm Co., Ltd
33 Preah Sihanouk Blvd
P. O. Box 2468 Phnom Penh
Kingdom of Cambodia

Tel +855 12 800 800
Fax +855 12 801 801

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: 202-974-4384
E 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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