27557 - Digicel Panama

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Summary of Proposed Investment

Project Number

27557

Company Name

Digicel (Panama), S.A.

Date SPI Disclosed

Aug 28, 2008

Country

Panama

Industry

Telecommunications and Technology

Projected Board Date

Sep 30, 2008

Status

Completed

Sector

Mobile Telephony

Department

Gbl Infrastructure & Natural Resources

Environmental Category

B - Limited

Previous Events

Approved : Nov 24, 2008
Signed : Nov 28, 2008
Invested : Dec 19, 2008

Project Description

The project consists of the construction and operation of a greenfield mobile cellular telephone network in Panama, sponsored by Digicel Central America Holdings Limited. The project will be implemented by Digicel Panama S.A. (the company or Digicel Panama), a Panama-based company that is 75% owned by the Digicel Group, a leading telecommunications enterprise, and 25% owned by the Bettsak Family, a successful local business group. Digicel Panama was awarded the third nationwide GSM cellular telephony license in Panama in May 2008 through an open tender process for which it agreed to pay $86 million.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	50.0
Equity

Development Impact

- Improve Access to telecoms services: The project will improve the availability of reliable and affordable communications services for consumers and businesses in Panama.

- Increase competition in the Telecoms sector. Panama’s mobile market is currently a two player marker. The entry of an experienced player such as Digicel will encourage the two existing mobile operators to:

- invest further in their networks, thereby increasing availability and stimulating improved service standards and value added services, especially in previously uncovered rural areas; and
- lower tariffs for consumers in general.

- Expand geographic coverage. Digicel plans to provide coverage in all major cities and rural areas, thus significantly increasing geographic and population coverage.

- Increase Employment. The Project will create high quality employment opportunities in Panama both at the Company and distribution levels. Digicel plans to hire 350 people directly in its operations and estimates the indirect employment of additional 1,000 people.

- Support Local Companies/SMEs. In addition to improving the overall reliability of telecommunications, Digicel plans to expand services directed to the local business community, thus enhancing the efficiency and competitiveness of these companies

Promote regional integration: The Digicel Group is seeking to replicate its past success in the Caribbean and the Pacific throughout Central America region. By supporting Digicel’s plan to scale up its activities across this region, IFC will continue to work with a partner who has demonstrated a clear track record of developing projects in difficult economies such as Haiti, promoting regional integration and improving global competitiveness in the regions in which it operates.

Knowledge sharing on innovative business models for extending rural connectivity. The high cost of rural network deployment is a key barrier to increasing rural penetration in many developing countries including Panama. In its operations throughout the Caribbean and the Pacific, Digicel has taken a leading role in pioneering innovative solutions for reducing the cost of rural deployment. Digicel seeks to leverage IFC’s knowledge, experience and relationships with other operators and industry groups to develop further new initiatives around increasing access in rural and low income urban areas.

Assist Digicel in structuring the financing: IFC will be taking a leading role in structuring the financing for Digicel Panama on behalf of the lender group. IFC’s long term relationship with the client as well as our experience in previous Digicel financings will facilitate quick and efficient processing of the transaction.

This project involves the construction and operation of a greenfield cellular telephone network, with construction and maintenance of cellular tower sites and related facilities. The key environmental and social issue associated with the project is implementation of a formal, integrated policy and procedures for environmental, health, safety, and social management, including labor and working conditions of both employees and contractors. 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 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

Raul Salvado
Digicel Panama
Samuel Lewis Avenue
53rd Street
Omega Building
Panama City, Panama

Telephone: 507-6676-4033
Fax: 507-300-0469

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

Local Access of Project Documentation

Environmental documents will be made available at the company’s headquarters:

Digicel Panama
Samuel Lewis Avenue
53rd Street
Omega Building
Panama City, Panama

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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