Project summary document

Project description
and objectives:

The proposed project will finance the construction, laying, commissioning and operation of a high capacity sub-sea cable to connect Georgia with Bulgaria, together with on-shore network extensions connecting the city of Poti to Tbilisi and Azerbaijan-Georgia border. This will enable Caucasus Online to route its own and transit traffic from other countries in Caucasus and, in the future, Central Asia, cost effectively to Europe and to sell spare capacity to operators in Europe to route their traffic from Europe to Georgia, rest of Caucasus, Central Asia and beyond.

Transition impact:

The project will support the development of a modern and competitive and effective telecommunications and internet services market in Georgia. This includes the promotion of network expansion thereby increasing access to telephony and internet services and improving the quality of services. Furthermore, the project encourages the development of innovative and advanced communication services and extends the development of the sector beyond basic telephone services. Greater competition should enhance the speed, range and quality of these services as well as bring cost benefits such as cheaper international access.

The client:

Caucasus Online, the leading Internet Service Provider (ISP) and Long Distance communication provider in the Republic of Georgia. Caucasus Online has been operating since 1997 as one of the pioneers in the Georgian Internet Service market. In 2000 Mr. Mamia Sanadiradze acquired the Company and became its CEO. He holds 80.1% of the shares and the balance of the shares are held by GML International Limited 10% and TBC Bank 9.9%.

EBRD finance:

USD 35 million financing package composed of a senior secured debt and an equity investment in 5% share capital of Caucasus Online.

Total project cost:

USD 76 million.

Environmental impact:

The operation was classified B/0. The project could involve some specific environmental issues which can be readily addressed. Environmental due diligence is currently underway. Installation of sub-sea cable in the Black Sea between Georgia and Bulgaria and the construction of terrestrial extensions could have some environmental issues. These issues include as follows: official environmental approvals both in Georgia and Bulgaria, overall environmental, health and safety management systems, adequacy of the site selection, impacts on fisheries, marine ecology, bird population, archaeological sites, landscape and visual characteristics of the coastal sites, construction disturbance such as noise and traffic, construction worker safety and legal protection. Established environmental mitigation measures for installation of sub-sea cable are available through good international practice/standards (such as MARPOL 73/78). The Company should demonstrate as to how they adhere to good international practice/standards for the proposed operation. The project is required to comply with respective national and EU environmental, health, safety and labour standards. An Environmental Action Plan (EAP) should be developed and agreed for the project. The project will be required to comply with national and EU environmental, health and safety standards and requirements, implement an EAP and submit an Annual Environmental Report to the Bank. The Bank will monitor the project’s environmental performance during the life of the project through a review of the Annual Environmental Report as well as monitoring visit where necessary and adequate.

Technical
cooperation:

None.

For consultant opportunities for projects financed by technical cooperation funds, visit procurement of consultants.

Company contact:

Vahan Mgebryan Chief Financial Officer
Caucasus Online LLC

E-mail: vahan@caucasus.net

EBRD contact:

Abduaziz Muminov, Operation Leader: muminova@ebrd.com

Business opportunities:

For business opportunities or procurement, contact the client company.

General enquiries:

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168; Fax: +44 20 7338 7380
Email: projectenquiries@ebrd.com