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EBRD and EU support broadband expansion in Azerbaijan

By Rezo Bitsadze

  • EBRD lends US$ 50 million to Aztelekom for telecoms growth across the country
  • Network expansion to improve broadband speed, capacity and bandwidth for households
  • First transaction in Azerbaijan’s digital sector to benefit from EU EFSD+ guarantee coverage 

The European Bank for Reconstruction and Development (EBRD) is providing a loan of up to US$ 50 million to Aztelekom to finance the rollout of state-of-the-art broadband infrastructure to more than 280,000 households in the regions of Azerbaijan. The company’s planned network expansion will improve speed, capacity and bandwidth, bridging the digital divide between the capital and rural areas. 

Baku Telephone Communications LLC will act as a co-borrower together with Aztelekom LLC. The financing will be the first EBRD transaction in the sector and be supported by a guarantee through the European Fund for Sustainable Development Plus (EFSD+).  

The loan is being provided as part of the European Union’s (EU) ambitious Economic and Investment Plan for the Eastern Partnership, which – complemented by support for reforms and good governance – aims to deliver tangible benefits to citizens by generating jobs and economic investment across the region. 

Boosting the digital sector and providing reliable broadband support are key priorities for both the EBRD and the EU. They are working closely together to support the bloc’s new Global Gateway Strategy, in particular, to boost smart, clean and secure links in the digital, energy and transport sectors. 

Matteo Patrone, EBRD Managing Director for Eastern Europe and the Caucasus said: “Investing in reliable digital infrastructure means investing in the future. Reliable broadband services are vital to making businesses more competitive and boosting the economy – now more than ever in the wake of the Covid-19 pandemic. Together with our partners – the EU, in particular – we are working relentlessly to support businesses and improve people’s daily lives.” 

Lawrence Meredith, Director of the EU’s Eastern Neighbourhood and Institution Building at the European Commission, noted: “This investment shows how the Economic and Investment Plan is delivering concrete results that improve the living standards of people. By guaranteeing this investment, we are supporting Azerbaijan in developing modern and sustainable connectivity and addressing the urban-rural digital divide.” 

Klaus Mueller said CEO of Aztelekom said:  “This is a positive development since the EBRD has allocated a loan without state guarantee to Aztelekom, the main operator of the "Online Azerbaijan" project, which is currently being implemented by the Ministry of Digital Development and Transport, for building a broadband internet connection around the country. Aztelekom has successfully passed the rigorous due diligence process of the EBRD on the assessment of creditors, which includes health, safety, ecological, gender issues and so forth. By meeting the EBRD's strict requirements, the company became one of a select group of companies in the country and region that signed a loan agreement with the EBRD. This fact indicates that Aztelekom has made significant progress in corporate management.” 

The EU is set to grant a further €1 million as part of the EFSD+ guarantee to the Ministry of Digital Development and Transport to enable the implementation of institutional measures to improve competition and regulation in the telecommunications sectors, as well as to strengthen the borrowers’ corporate governance.  

While fibre-to-the-home (FTTH) broadband networks offer greater bandwidth, reliability and cost efficiency than outdated copper-based technologies, rollouts to date have been focused on major urban centres. The country-wide rollout of FTTH to rural areas stands to contribute significantly to inclusive and sustainable economic growth in Azerbaijan.  

The EU’s EFSD+ Guarantee Programme supports financing and investment operations in partner countries. It supports EBRD operations in the southern and eastern Mediterranean region (Egypt, Jordan, Morocco, Tunisia, Lebanon and the West Bank and Gaza), as well as in eastern Europe and the Caucasus (Armenia, Azerbaijan, Georgia, Moldova and Ukraine). EU guarantees also support economies affected by the Covid-19 pandemic and by Russia’s war on Ukraine. 

The EBRD is a leading institutional investor in Azerbaijan, where it has invested more than €3.6 billion in 185 projects to date in the financial, corporate, infrastructure and energy sectors, with most of those investments in private enterprises. The Bank’s strategy in the country focuses on helping Azerbaijan to diversify its economy and develop the non-oil private sector. 

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