MIGA issued guarantees of $55.96 million and $19.0 million to Investcom Holding S.A. of Luxembourg and Teleinvest Ltd. of the Cayman Islands for their respective $62.18 million and $21.15 million equity investments in Spacetel Syria S.A. Both guarantees cover a period of ten years and provide coverage against the risks of transfer restrictions, expropriation, war and civil disturbance, and breach of contract.
The project addresses the increase in demand for telephone lines and the need for improved telecommunication infrastructures in Syria. It consists of the installation and operation by Spacetel of one of two mobile telephone networks based on GSM technology. Spacetel cur-rently serves more then 500,000 subscribers with a network capable of handling more than 1.3 million subscribers and will gradually increase its network capacity to address the demand for 3 million additional telephone lines in the country. At the end of the 15-year build, operate, and transfer (BOT) concession scheme (July 2017), the sponsors will transfer, at no charge, ownership of the project to the Syrian Telecommunication Establishment, which operates the telecommunications sector in Syria.
The project is expected to provide substantial revenues to the government of Syria. Spacetel will provide the government with an increasing percentage of the revenues from oper-ations to reach 50 percent in the seventh year. Spacetel expects to increase the number of employees substantially over the next five years. Average workers’ wages will be 90 percent higher than the domestic sector standard, and Spacetel will provide its employees with extensive training. Technical staff will be sent to engineering and training institutes abroad. In addition to bringing an efficient and reliable mobile telephone network to the Syrian Arab Republic, the project will rely on domestic companies for advertising, engineering, IT and software companies, cable installation and construction, and will foster local enterprise development.
The project addresses two of MIGA’s priority areas: supporting basic infrastructure and encouraging cross-border investment among developing countries (Investcom Holding S.A. is incorporated in Luxembourg, but operates out of Lebanon, and Tele Invest is incor-porated in the Cayman Islands, but operates out of Saudi Arabia ). It also represents an inte-grated complement to the World Bank and IFC’s efforts to foster foreign direct investment in the country, as well as improving the performance of the telecommunications sector.