Digicel Asks for Loan

The Irish-owned Caribbean and Central American mobile telecommunications group Digicel has approached the private sector division of the World Bank, the International Finance Corporation (IFC), for a loan of between USD50 million and USD75 million to help fund its estimated USD400 million investment to launch commercial services in Honduras.

According to a report on the IFC’s website, as quoted by BNamericas, the World Bank body has applauded Digicel’s credit history and welcomed its plans for Honduras, a country where ‘private financing from local or from international commercial banks without multilateral support is scarce’. The IFC statement went on to say that ‘the entry of an experienced player such as Digicel into the market will encourage the existing mobile operators to invest further in their networks, thereby increasing availability and stimulating improved service standards, the development of value added services, and lower tariffs for consumers.’

Digicel Honduras, a wholly owned subsidiary of Digicel Central America Holdings Limited, is remaining tight-lipped on the details of the loan and the estimated CAPEX, but its chief executive Miguel Garcia did say that if everything goes according to plan, operations would be up and running by Christmas.

The Honduran Congress approved Digicel’s contract on 24 April and the newcomer is expecting to hear within weeks if it has received its licence and can begin paying for it. Digicel Honduras won a competitive tender for Honduras’ fourth mobile licence on 20 December 2007, with a bid of USD80.1 million. It beat off a rival bid from Iusacell of Mexico which offered USD10 million – the minimum price set for the licence – and industry watchers have questioned whether it overpaid for the concession.

The Honduran mobile market is home to two active mobile operators, Tigo, operated by Millicom International Cellular, and Sercom de Honduras (Claro), owned by Mexico’s America Movil (AM). According to TeleGeography’s GlobalComms database, a third licence has been awarded to fixed line operator Hondutel, but to the regulator’s despair the PTO is yet to launch a commercial service. At the end of 2007 the country had around 4.56 million mobile users, up from 2.29 million at the start of the year, of which Tigo claimed around 64%.

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