—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
"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
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.