The European Investment Bank (EIB), the European Union's financing institution, has signed a EUR 500 million loan, divided into two tranches of EUR 125 and 375 million, to TELEFÓNICA, for adapting its local loop to broadband services across the existing telephony network.

Classed as telecoms infrastructure of European interest (TEN), the project will allow the deployment of technologies such as ADSL (Asymmetric Digital Subscriber Line), ATM/IP (Asynchronous Transfer Mode/Internet Protocol) and ISDN (Integrated Services Digital Network) throughout Spain. More specifically, the loan will finance the digitalisation of Telefónica's local loop access and platforms for high-speed data transmission, telematics and integrated services.

Upgrading the network will contribute to meeting Spain's growing demand for high-speed Internet services by providing faster, cheaper and widely available data transmission services and Internet access. In general, the project will cover Objective 1 and 2 regions, promoting regional development as well as fostering investment in innovation and helping to build the information society in Spain.

This loan comes under the EIB's Innovation 2000 Initiative (i2i) aimed at encouraging the development of a knowledge and innovation-based European economy. i2i focuses on human capital formation, research and development, the dissemination of information, promotion of SMEs and entrepreneurship, and development of information and communications technology networks.

Since i2i's launch in June 2000, the EIB has granted loans totalling over EUR 10 800 million for projects under this heading in the Union and Accession Countries, including more than EUR 2 250 million for schemes in Spain.

The EIB was created in 1958 by the Treaty of Rome establishing the European Economic Community, with the remit of contributing to the integration, balanced development and economic and social cohesion of the Member States through long-term financing for projects furthering the Union's objectives.

The EIB plays a key role in financing communications - including telecommunications - infrastructure, as means of fostering European integration. Such infrastructure helps to bring the Member States together, boosting the growth potential of their poorest and most remote regions.

In 2002, the EIB granted loans totalling approximately EUR 39 600 million, of which 5 426 million went towards projects in Spain.