30304 - SPV Cont Towers

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Summary of Proposed Investment

Project Number

30304

Company Name

Continental Towers Holding Corp

Date SPI Disclosed

May 3, 2011

Country

Central America Subregion

Industry

Telecommunications and Technology

Projected Board Date

Jun 3, 2011

Status

Completed

Sector

Other (Including Satellite Telecommunications, Radio and Television Broadcasting, etc.)

Department

WBG Digital and AI

Environmental Category

B - Limited

Previous Events

Approved : Dec 5, 2011
Signed : May 4, 2012
Invested : May 25, 2012

Project Description

Continental Towers Holding Corporation (“Continental” or the “Company”) is a Central American telecommunications infrastructure sharing company created in 2008. The Project consists of the construction, operation and maintenance of towers in Central America, as well as the refinancing of its medium term debt. The Sponsor Terra Towers (“Terra” or the “Sponsor”), a Guatemalan company, founded Continental and together with a $70 million loan facility from Credit Suisse First Boston, started the Company’s operations. Currently, the Company through its operating companies owns and operates about 500 towers in five Central American countries (Guatemala, Honduras, El Salvador, Panama, and Costa Rica). The Company is seeking $120 million of funding to: i) expand its operations by doubling its capacity, bringing its total portfolio of towers to about 1,000 by the end of 2012; and ii) refinance its existing medium term debt facility. The project also contemplates a possible geographical expansion with the penetration of other countries in the region.

Sponsor / Cost / Location

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

Development Impact

-Improved mobile and broadband access: Access is one of the 3 pillars of IFC''s telecoms strategy, is achieved through overall business efficiency thanks to the co-location model, as the telecoms ecosystem benefits from tower costs spread amongst multiple carriers, leading to improved access (coverage, prices, provision of additional services, etc.). The other pillars i.e. mainstreaming of private and public services and the fostering of innovation, are also achieved by a more efficient telecoms industry.
- Reduced capex and lowers operating costs: For telecoms operators, the reduced costs can translate into lower cost of services for users. Potentially, operators can unlock cash from their balance sheets (in the case existing towers are sold to independent third party operators), critical in a region like Central America, where financing options are scarce.
- Telecom sector growth Infrastructure sharing is critical in further fuelling the evolution of the telecoms market, indirectly assisting in the development of mobile broadband, and more indirectly, content and applications, mobile finance and mobile advertising, as several industry segments begin converging.
-Increased competition: co-location allows smaller operators to have access to a well managed network and they can quickly roll out their network and compete more effectively.
- Environmental benefits become evident, especially in reducing the visual burden of the explosion in tower masts (i.e., as a result of mobile telephony markets with as many as 5 operators).
- The Project also assists in the creation of both direct and indirect employment opportunities.

- Provision of Long-term Financing: Given their high operational and financial leverage, infrastructure sharing projects in general depend highly on obtaining long term financing. Such long tenors are currently not available for local sponsors in Central America.
- Resource mobilization: IFC''s participation will help mobilize third party investors (i.e., IFI, DFI, ALAC fund) which are a pre-requisite in assuring a fully-funded business plan.
- Knowledge Sharing: Continental Towers may leverage IFC''s knowledge, experience and relationships with operators and industry groups to develop new initiatives like increasing access in rural and low income urban areas.
- Regional expansion: IFC''s participation could eventually help the Sponsor broaden the scope of its footprint, potentially expanding into the Caribbean or South America. Though, currently, they want to remain within their comfort zone (Central America) until they have a more solid position (i.e., financially and in terms of partners). IFC may accelerate this process.
- Establish and maintain good Environmental & Social standards as well as Corporate Governance. IFC will ensure that Continental Towers develops and implements the proper policies and procedures as it continue to grow in the region.
- Continental Towers would like to leverage the work done by IFC in the area of Green Power for Mobile and intends to explore the possibility of expanding its service offering in the future to include providing green energy solutions to its clients.
- Knowledge of Policy and Regulation: As part of World Bank Group and leveraging on the latter''s activities in the region, IFC brings the ability to address potential policy/regulatory issues.

The key environmental and social issues associated with the project are the company''s environmental, health, safety, and social (EHSS) management; EHSS screening of new sites; construction at new sites; labor and working conditions (including contractor occupational health and safety); and pollution prevention and abatement. This has been classified as a Category B project according to IFC''s Procedure for Environmental and Social Review of Projects. As a condition of IFC''s investment, Continental Towers will commit to developing and implementing a Social and Environmental Management System for ensuring that all relevant social and environmental risks and impacts are managed as appropriate. Specific information about how risks, impacts and opportunities will be addressed by Continental Towers is summarized in the Environmental and Social Review Summary for the project.

Contacts

For Inquiries About the Project, Contact

Continental Towers Holding Corp.
Jose Paz
Managing Director
Tel +(502) 2326-5000
Fax +(502) 2326-5023
15 avenida 17-40 zona 13, Noveno Nivel,
Guatemala, Guatemala

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

Mr. Federico Lorenzana
c/o Continental Towers
florenzana@mip.com.gt

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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