This summary covers investments by Orascom Telecom Holding S.A.E. (“Orascom Telecom”) of Egypt into its Banglalink mobile telecommunications project in Bangladesh. The investor has applied for MIGA guarantees totaling $500 million for a period of up to six years against the risks of transfer restriction, expropriation, and war and civil disturbance.
Orascom made its initial investment into the project in September 2004 through its wholly-owned subsidiary Orascom Telecom Ventures Ltd. The project involved the acquisition of Sheba Telecom (Pvt.) Ltd. (subsequently renamed Banglalink) and the operation and maintenance of a national mobile telephone network based on GSM technology. MIGA issued a guarantee of $78.3 million to Orascom Telecom in July 2005 covering its initial equity investment in the project.
Banglalink has expanded rapidly since MIGA’s previous cover in 2005, with Orascom Telecom having initially replaced the existing infrastructure and then significantly expanded network coverage and capacity using new technology and equipment, resulting in a high-quality mobile telecommunications service. Orascom Telecom’s investments have resulted in strong subscriber growth, increasing from 1.2 million subscribers at the end of 2005 to over 10 million at November 2008.
The investor has requested that MIGA replace the existing guarantee of $78.3 million with guarantees amounting to $500 million to reflect the additional investments that have been made.
Environmental and Social Categorization
The project is a Category C under MIGA’s Policy on Social and Environmental Sustainability. The investments made since 2005 on infrastructure and related physical works, including land take, have not caused any adverse social and environmental impacts. The new expansion is expected to be similar. The project is required to inform MIGA in the event of any change in scope and for further land acquisition, and such changes would need to comply with MIGA’s Performance Standards on Social and Environmental Sustainability.
Banglalink is a key player in a competitive market in Bangladesh and offers high quality and innovative services to its customers. Cell phone networks are one of the most significant success stories of private sector participation in infrastructure and investment in the country. Banglalink also provides tax and license revenues to the government and provides direct and indirect employment in a variety of sectors.
MIGA’s proposed participation in the project is aligned with key agency priorities, which include supporting South-South investments, investments in infrastructure, and investments in IDA-eligible countries. The project is also aligned with the World Bank’s Country Assistance Strategy as it is contributing to an improved investment climate.
This project is no longer being considered for a MIGA guarantee, as of March 25, 2009.