MIGA has issued a $78.3 million guarantee to Orascom Telecom Holding SAE, a company organized under the laws of Egypt, covering its equity investment in Sheba Telecom Ltd. in Bangladesh. The guarantee is for a period of up to 15 years and covers against the risks of transfer restriction, expropriation and war and civil disturbance. Orascom made this investment through its wholly owned subsidiary Orascom Telecom Ventures, which is incorporated in the British Virgin Islands.
The project involves the acquisition, operation and maintenance of a national mobile telephone network based on GSM technology. The company offers countrywide services. Since acquiring Sheba, Orascom has upgraded the network and re-branded the company as Banglalink. Orascom has rapidly deployed new network infrastructure, set up a distribution network, and offers high-quality mobile services at competitive prices.
By supporting this project, MIGA aims to help the government address the acute shortage of reliable telephone services in the country. Bangladesh has an extremely low teledensity of less than 1 percent. Landline telephony is exorbitantly expensive for the majority of Bangladeshis, with connection charges as high as $150 and the average wait for a connection ranging from 10-13 months.
Sheba expects to increase its number of customers from the current one million to more than six million by 2012. The project will expand access to telecommunications throughout the country, thereby facilitating commerce in rural and urban areas. The national government will receive a 1 percent share of the project’s annual revenue in addition to $20 million annually in corporate and other taxes. Consumers will benefit from better and cheaper cellular service. Sheba’s actions have prompted other operators to improve their networks, and the increased competition has caused rates to fall by 25-30 percent. The company also employs and trains 350 local staff and about 2,000 people through exclusive dealers of Sheba service.