US$100 MILLION INVESTED IN LEBANON'S TELECOM SECTOR
L. Joseph
E-mail: LJoseph@ifc.org
—Expansion of GSM Cellular Telephone Network—
WASHINGTON, D.C., July 16,—The International Finance Corporation (IFC) and Société Générale (SocGen) of France and Lebanon today finalized the financing of FTML (France Telecom Mobiles Liban) in Beirut, Lebanon. FTML is one of two private GSM (Global System for Mobile Communications) cellular companies operating in Lebanon under a 10-year BOT (Build-Operate-Transfer) contract granted in 1994 by the Ministry of Posts and Telecommunications.
This financing package consists of a US$75 million IFC investment and a parallel senior loan of US$25 million from commercial banks in Lebanon led by Société Générale Libano-Européenne de Banque (SGLEB). IFC's investment includes a senior loan of US$20 million and a subordinated loan of US$10 million, both for IFC's account, and a syndicated loan of US$45 million for the account of participant banks, jointly arranged with SocGen. The financing package will help finance FTML's US$190 million expansion of its digital GSM network.
The loan agreement for IFC's investment was signed by Dr. Mohsen Khalil, Principal Investment Officer, IFC and by Dr. Salah Bouraad, President and CEO, FTML. The agreement for the local loan was signed by the heads of the participant Lebanese banks.
The shareholders of FTML are France Telecom Mobiles International (FTMI) and the Mikati family. FTMI is the international arm for cellular operations of France Telecom, the main French telephone operator with investments in cellular operations in several Asian and European countries. The Mikati family of Lebanon has interests in the telecom sector. Since the start of operations more than two years ago, FTML has experienced substantial market growth as well as unusually high usage levels, which are several times greater than the international average. As a result, FTML needs to invest additional resources to expand its network capacity, alleviate blockage problems resulting from traffic congestion and improve the quality of its service.
"By making our first investment in Lebanon's telecom sector, IFC is helping to upgrade the country's infrastructure, which suffered substantial damage during the war and is currently inadequate to support its needs," said Mr. Declan Duff, Director of IFC's Transportation, Telecommunications and Utilities Department. "Restoring the country's infrastructure and the high quality of basic services is key to Lebanon's economic recovery and its efforts to regain its position as a center for banking, commerce and tourism in the Middle East." Mr. Duff added that IFC's investment was expected to encourage more private sector participation in Lebanon's infrastructure.
IFC, a member of the World Bank Group, is the largest multilateral source of equity and loan financing for private sector projects in developing countries. To date, IFC has invested US$1.9 billion in telecom projects worldwide, of which US$711 million was for IFC's account. IFC's total investments in Lebanon to date includes US$226 million for its own account and an additional US$210 million for the account of international commercial banks.
SocGen, a major bank involved in project finance worldwide, has been appointed as arranger in a large number of transactions and has worked with FTML in this project utilizing its global financial expertise developed in the telecom sector. "Lebanon is a promising country in terms of private financing," said Mrs. G. Muller, Head of Telecommunication -- Project Finance, SocGen. "The success of this high profile transaction, the most important project finance in Lebanon so far, has been achieved through the close cooperation of IFC, SocGen and SGLEB," she added.
SGLEB is one of the leading banks in Lebanon with an extensive network across the country. "The successful syndication of this transaction in Lebanon is an indication of SGLEB's important role in project finance and the commitment of the participant Lebanese banks in the country's reconstruction," said Mr. Maurice Sehnaoui, President of SGLEB.