The European Investment Bank is providing a USD 51.2 million loan to Otecel S.A. for investment in a new mobile network operating in the GSM standard.
The rollout of the GSM network will extend coverage into areas of the country, which have not been yet served, and will allow for capacity increases in the main cities.
Improved access to telecommunications helps to promote economic development as crucial information for economic agents may circulate efficiently and at lower cost. The project will allow increasing the customer base among medium to low-level socio economic sectors as well as in rural areas.
The project is part of an investment programme by subsidiaries of Telefónica in Colombia, Ecuador and Peru, which is supported by the EIB under the EU economic cooperation policy aimed at fostering regional integration and transfer of technology. Economic integration among the three countries has been growing but still remains limited. The largest bilateral trade flow among them does not exceed 8% of total exports. The EIB loan is extend for 12 years and benefits from a guarantee offered by the EU budget to cover political risk.
The loan is provided in the context of the EU co-operation policy with third countries. In Asia and Latin America (ALA), the EIB may lend up to EUR 2.48 billion during 2000-2006 (ALA III) to support capital investment projects implemented by subsidiaries of EU companies or joint-ventures between EU and ALA firms, or investment that results in environmental improvements or fosters regional integration. Ending 2005, the Bank had provided 44 loans in ALA, with a geographical coverage of 18 countries, for a total amount of EUR 1.9 billion under the current mandate so far (ALA III). Some 80% of loans were made to private sector borrowers. Lending in Latin America was € 1.3 billion for 30 projects.