41711 PPI data update note 7 November 2007 Private activity in telecommunications remained stable in 2006 In 2006 investment commitments to telecommunications projects with private participation remained around the peak level reached in the previous year, according to just-released data from the Private Participation in Infrastructure Project Database.1 As in 2005, the high level of investment commitments (hereafter, "investment") was driven by projects implemented in previous years. These attracted US$51.6 billion in investment, while new projects accounted for US$11.5 billion, bringing total investment commitments to US$63.1 billion (figure 1).2 When only investments in physical assets are counted--that is, excluding payments to the government (such as concession or lease fees and divestiture revenues)--investment in 2006 was the highest of the 1990­2006 period (figure 2). Figure 1 Investment commitments to telecom projects with private Figure 2 Investment commitments to telecom projects with private participation in developing countries, 1990­2006 participation in developing countries by form of investment, 1990­2006* 80 2006 US$ billions* Projects120 2006 100 60 80 2000 40 60 40 20 1995 20 0 0 1990 1990 1995 2000 2006 0 10 20 30 40 50 60 70 2006 US$ billions* New projects Previously implemented projects Telecom projects Investment in physical assets Payments to the government Source: World Bank and PPIAF, PPI Project Database. * Adjusted by the 2006 US CPI. Source: World Bank and PPIAF, PPI Project Database. * Adjusted by the 2006 US CPI. Thirty-one telecommunications projects with private participation reached financial or contractual closure in 22 low- and middle-income countries in 2006. Of these projects, 21 were greenfield projects, involving investment of US$4.6 billion. The other 10 were divestitures, with investment of US$6.9 billion. Previously implemented greenfield projects accounted for another US$35.3 billion in investment, and previously divested projects for US$16.3 billion more. As in previous years, stand-alone mobile and multiservice operators accounted for most of the investment and new projects in telecommunications (figures 3 and 4). The concentration of activity in these segments was observed across developing regions. Activity by region. Investment has become less concentrated by country in recent years. In 2006 the top 5 countries by investment--India, Brazil, the Russian Federation, the Arab Republic of Egypt, and Mexico--accounted for 40%, while the top 10 countries (with Nigeria, Pakistan, Serbia and 1Telecommunications includes projects that provide basic telephone services (fixed access and long distance) or mobile access using their own physical infrastructure. Not included are voice over Internet protocol (VoIP) services or operators providing services with leased infrastructure. 2Data on telecommunications contracts include primarily medium-size and large projects as reported by the media and other public sources. Small-scale projects are generally not included because of the lack of public information. Additional annual investments in some previously implemented projects may also have been omitted for the same reason. - 1 - Montenegro3, Tunisia, and Turkey added to the list) represented 58%. In the previous three years the top 5 countries had accounted for 47% of annual investment, and the top 10 for 62­68%. Figure 3 Investment commitments to telecom projects with private Figure 4 Telecom projects with private participation in participation in developing countries by segment, 1990­2006 developing countries by segment, 1990­2006 Projects 2006 US$ billions* 70 120 60 100 50 80 40 60 30 20 40 10 20 0 1990 1995 2000 2006 0 1990 1995 2000 2006 Fixed access Fixed access and long distance Long distance Mobile access Multiservice provider Fixed access Fixed access and long distance Long distance Mobile access Multiservice provider Source: World Bank and PPIAF, PPI Project Database. * Adjusted by the 2006 US CPI. Source: World Bank and PPIAF, PPI Project Database. In East Asia in 2006, investment in previously implemented projects amounted to US$4.2 billion. Most of that investment went to mobile and multiservice providers in Indonesia and Thailand. The region had no new telecommunications projects. (For new projects by region, see tables below.) In Europe and Central Asia investment in previously implemented projects totaled US$14.4 billion. In addition, six countries had eight new projects for US$3.7 billion, bringing total investment to US$18 billion. Azerbaijan signed a new mobile license (Azerfon). Bosnia and Herzegovina divested Telekom Srpske, a state-owned multiservice provider. Estonia granted a mobile license to a new operator (Bravocom). Georgia divested United Telecommunications Company of Georgia and granted a new mobile license. The Kyrgyz Republic authorized a new mobile operator (BiMoCom). Serbia and Montenegro divested Telenor Serbia, a mobile operator formerly known as Mobi 063 and Mobtel that had been nationalized in early 2006. That country also granted a new mobile license (VIP Mobil). Latin America and the Caribbean had investment in previously implemented projects of US$13.5 billion. In addition, four countries had seven new projects with investment of US$800 million, bringing total investment to US$14.3 billion. Colombia divested the controlling stakes in Telefonica Telecom, formerly known as Colombia de Telecomunicaciones SA­the incumbent national fixed line and long- distance operator, and Colombia Movil, a mobile operator owned by the municipal governments of Bogota and Medellin. In addition, Telmex Colombia SA began providing fixed access and long-distance services. In Ecuador two fixed line operators began providing service. And Digicel began operating under new mobile licenses in Haiti and Trinidad and Tobago. In the Middle East and North Africa previously implemented projects attracted investment of US$2.6 billion, while three new projects had investment of US$5.5 billion, bringing the total to US$8.1 billion. Egypt awarded a 15-year 3G mobile license to Etisalat Misr for US$2.9 billion, and the company began deploying its network, investing around US$175 million. Tunisia divested a 35% controlling stake in Tunisie Telecom, the incumbent national fixed line and mobile operator, for US$2.25 billion. And the Republic of Yemen partially divested its national mobile operator. In South Asia investment in previously implemented projects amounted to US$11 billion, while three new projects in two countries attracted investment of US$370 million. Afghanistan granted two new licenses: one for mobile services (Etisalat Afghanistan) and the other for fixed and mobile services (Wasel Telecom). Bhutan opened its telecommunications market to the private sector by granting a mobile license to local investors. Sub-Saharan Africa had investment in previously implemented projects amounting to US$5.8 billion. In addition, seven countries implemented 10 new projects with investment of US$1.1 billion, bringing 3 Although Montenegro declared independence from Serbia and Montenegro on June 3, 2006, this edition of Private Participation in Infrastructure Projects Database continues to list and show data for Serbia and Montenegro together. - 2 - the total to US$6.9 billion. Burkina Faso divested a controlling stake in Onatel, its incumbent fixed line operator, which also provides mobile access. The Democratic Republic of Congo signed a new mobile and fixed access license (Warid Congo). The Gambia authorized a new mobile operator (Comium Gambia). Guinea granted a new mobile license (Cellcom Guinee). Malawi divested a controlling stake in Malawi Telecommunications, its incumbent fixed line operator. Nigeria divested a controlling stake in Nigerian Telecommunications, another incumbent fixed line operator that also provides mobile access. With investment of US$750 million, this divestiture was the region's largest new telecommunications project in 2006. Nigeria also signed licenses for three new multiservice operators: Danjay Telecoms, Gicell Wireless, and PresTel. Finally, the Seychelles granted a new mobile license. Potential new projects. Besides the 31 projects reaching closure in 2006, at least 9 other telecommunications contracts were awarded, though they had not reached financial closure nor been signed before the end of the year. Eight were mobile licenses: two in Jamaica, one in Moldova, one in Papua New Guinea, one in Sri Lanka, two in Uganda, and one in West Bank and Gaza. The ninth project would introduce a second national operator in Kenya. Canceled and distressed projects. In 2006 four private telecommunications projects were canceled or became distressed, bringing the total number of such projects in the sector to 36. These contracts represent 5% of all telecommunications projects and 4% of committed investment in 1990­2006. Three contracts were canceled in 2006: a 15-year fixed access concession in Indonesia (PT Bukaka Singtel International), signed in 1996; a mobile operator (Mobtel) in Serbia and Montenegro with a license granted in 1997; and a long-distance carrier (Orbitel) in Colombia that had begun to operate in 1998. Venezuelan CANTV, the incumbent fixed line operator, became distressed after the government announced that the company would be nationalized in 2007. Concluded projects. One telecommunications project concluded in 2006: the three-year management contract for Ghana Telecom granted to Norwegian Telenor. The government of Ghana has subsequently announced plans to divest the incumbent operator. - 3 - Telecom projects reaching financial or contractual closure in 2006 Note: .. denotes missing data; n.a. means not applicable. Europe and Central Asia Country Project name Project Segment Type of PPI Private Investment Capacity Main sponsors status equity commitment size and (%) (US$ type millions) 1 Azerbaijan Azerfon Construction Mobile access Greenfield 90 300.0 .. Celex Communications (30%, project United Kingdom), Extel (30%, United Kingdom), Siemens AG (30%, Germany) 2 Bosnia and Telekom Srpske Operational Fixed access, Divestiture 65 860.5 917,000 Telekom Srbija (65%, Serbia and Herzegovina mobile access, and connections Montenegro) long distance 3 Estonia Bravocom 3G License Construction Mobile access Greenfield 100 5.8 .. Bravocom (100%, Estonia) project 4 Georgia Mobitel Georgia Construction Mobile access Greenfield 100 30.0 .. Vimpelcom (51%, Russian project Federation) 5 Georgia United Operational Fixed access and Divestiture 90.6 90.0 350,000 Silk Road Group (45%, Georgia), Telecommunications long distance connections TuranAlem (45%, Kazakhstan) Company of Georgia 6 Kyrgyz BiMoCom Operational Mobile access Greenfield 100 15.0 150,000 Eventis Telecom Holding (100%, Republic project connections Cyprus) 7 Serbia and Telenor Serbia Operational Mobile access Divestiture 100 1,937.4 2,464,000 Telenor (100%, Norway) Montenegro (a) connections 8 Serbia and VIP Mobil Construction Mobile access Greenfield 100 432.0 .. Mobilkom Austria (100%, Austria) Montenegro (a) project (a) Although Montenegro declared independence from Serbia and Montenegro on June 3, 2006, this edition of Private Participation in Infrastructure Projects Database continues to list and show data for Serbia and Montenegro together. Latin America and the Caribbean Country Project name Project Segment Type of PPI Private Investment Capacity Main sponsors status equity commitment size and (%) (US$ type millions) 1 Colombia Colombia Movil Operational Mobile access Divestiture 51 124.0 2,120,000 Millicom International (50%, (TIGO) connections Luxembourg) 2 Colombia Telefonica Telecom Operational Fixed access and Divestiture 52 368.0 2,400,000 Telefonica SA (52%, Spain) long distance connections 3 Colombia Telmex Colombia SA Operational Fixed access Greenfield 100 1.0 5,000 Telefonos de Mexico (Telmex) project connections (100%, Mexico) - 4 - 4 Ecuador Ecutel Operational Fixed access Greenfield 100 0.0 1,000 Emerica Group (..%, Ecuador) project connections 5 Ecuador Setel Operational Fixed access Greenfield 100 0.5 6,000 Grupo TV cable (..%, Ecuador) project connections 6 Haiti Digicel Haiti Operational Mobile access Greenfield 100 130.0 75,000 Digicel (100%, Bermuda) project connections 7 Trinidad and Digicel Trinidad & Operational Mobile access Greenfield 100 190.0 122,000 Zenith Diversified Holdings Limited Tobago Tobago project connections (..%, ..), Digicel (..%, Bermuda), HCL Group (..%, ..) Middle East and North Africa Country Project name Project Segment Type of PPI Private Investment Capacity Main sponsors status equity commitment size and (%) (US$ type millions) 1 Egypt, Arab Etisalat Misr Construction Mobile access and Greenfield 70 3,075.0 .. Emirates Telecommunications Rep. long distance project Corporation (66%, United Arab Emirates) 2 Tunisia Tunisie Telecom Operational Fixed access, Divestiture 35 2,250.0 4,600,000 Dubai Holding (35%, United Arab mobile access, and connections Emirates) long distance 3 Yemen, Yemen Mobile Operational Mobile access and Divestiture 45 213.6 750,000 Others (45%, ..) Rep. long distance connections South Asia Country Project name Project Segment Type of PPI Private Investment Capacity Main sponsors status equity commitment size and (%) (US$ type millions) 1 Afghanistan Etisalat Afghanistan Operational Mobile access Greenfield 100 340.1 .. Emirates Telecommunications project Corporation (100%, United Arab Emirates) 2 Afghanistan Wasel Telecom Operational Fixed access, Greenfield 100 8.3 .. Modern Technology International mobile access, and project FZCO (100%, United Arab long distance Emirates) 3 Bhutan Tashi Group--second Construction Mobile access Greenfield 100 17.5 .. Tashi Group (100%, Bhutan) mobile license in project Bhutan - 5 - Sub-Saharan Africa Country Project name Project Segment Type of PPI Private Investment Capacity Main sponsors status equity commitment size and (%) (US$ type millions) 1 Burkina Onatel Operational Fixed access, Divestiture 65 290.0 507,000 Vivendi (26%, France) Faso mobile access, and connections long distance 2 Congo, Warid Congo Construction Fixed access, Greenfield 90 0.0 .. Abu Dhabi Group (..%, United Dem. Rep. mobile access, and project Arab Emirates) long distance 3 Gambia, Comium Gambia Construction Mobile access and Greenfield 100 0.0 .. Comium Group (100%, Lebanon) The long distance project 4 Guinea Cellcom Guinee Construction Mobile access and Greenfield 100 38.0 .. Cellcom Israel Ltd. (100%, Israel) long distance project 5 Malawi Malawi Operational Fixed access and Divestiture 90.6 30.5 60,000 Old Mutual (20%, South Africa), Telecommunications long distance connections Press Corporation Limited (52%, Ltd. (MTL) Malawi) 6 Nigeria Danjay Telecoms Ltd. Construction Fixed access, Greenfield 100 2.0 .. JAP Holdings Corp. (..%, Nigeria) mobile access, and project long distance 7 Nigeria Gicell Wireless Limited Construction Fixed access, Greenfield 100 5.1 .. Gicell Wireless Limited (..%, mobile access, and project Nigeria) long distance 8 Nigeria Nigerian Operational Fixed access, Divestiture 75 750.0 3,050,000 Transnational Corporation Plc. Telecommunications mobile access, and connections (51%, Nigeria) Ltd. (Nitel) Divestiture long distance 9 Nigeria Prest Cable & Satellite Construction Fixed access, Greenfield 100 2.0 .. GV Telecom (..%, Virgin Islands TV Systems Limited mobile access, and project [U.S.]) (PresTel) long distance 10 Seychelles Mediatech Operational Mobile access Greenfield 100 0.0 7,000 Mediatech International (100%, International project connections Seychelles) - 6 -