Aztelekom LLC

Location:

Azerbaijan

Project number:

50973

Business sector:

Information and Communication Technologies

Notice type:

Public

Environmental category:

B

Approval date:

24 Feb 2021

Status:

Concept Reviewed

PSD disclosed:

23 Sep 2019

Translated version of this PSD: Azeri

Project Description

Senior loan to Aztelekom LLC ("Aztelekom" or the "Borrower"), a state-owned company that provides telecommunication, internet and broadband services in Azerbaijan. The Bank will support the upgrade to fibre of the broadband infrastructure in the regions of Azerbaijan, replacing outdated technology with modern multiservice platforms, deployment of new backbone infrastructure and fixed wireless communication bases in remote settlements.

Project Objectives

The project will support Aztelekom to (i) improve the quality and coverage of its services, particularly in rural areas, where private investor involvement is limited, (ii) increase its customer base by introducing new multimedia services (i.e. IPTV, Smart Home), (iii) optimize operational costs by using modern and low-maintenance equipment and (iv) reduce CO2 emission by switching to more energy efficient equipment in place of outdated technologies.

Transition Impact

Moderate Good

The project is expected to have a significant transition impact under the "Competitive" transition quality through: (i) improved access to modern ICT infrastructure / higher penetration rates of modern ICT services in currently underserved areas; (ii) facilitation of the adoption and implementation of the legal, institutional and the regulatory changes intended as part of the Technical Cooperation (TC), planned to run alongside the project and designed to enable broadening of market liberalization.

As a secondary Transition Impact quality - "Well-Governed" - the project will aim to improve corporate governance in Aztelekom by implementing a corporate governance action plan that will address corporate governance issues identified in the company, including an establishment of an effective compliance function.

Client Information

AZTELEKOM LLC

The borrower is a national fixed-line operator active in the regions of Azerbaijan outside of Baku. In addition to telephony services, Aztelekom provides broadband and internet services and is the owner of telecom cable utility poles, ducts and fibre infrastructure in the regions.

EBRD Finance Summary

Provision of a long-term financing denominated in Azerbaijani Manat (AZN).

Environmental and Social Summary

Categorised B under 2014 ESP. Environmental & Social Due Diligence (ESDD) was carried out based on the review of the ESDD Questionnaire completed by the client and follow-up communications. The ESDD showed the following: the company's operations and cable expansion plans are not associated with significant environmental issues; the company is in compliance with national environmental and social (E&S) laws; their labour, occupational, health and safety practices are in compliance with national law as well and is in line with the EBRD's Performance Requirements (PR) 2 and 4. However, for the project, the company is required to assign a formal environmental manager for its operation, as a single item in the Environmental & Social Action Plan, as the firm has no designated environmental manager to ensure that the project complies with the Banks PRs.

Furthermore, the company needs to submit an annual E&S report to the Bank. The Bank will monitor the project's environmental and social performance by reviewing the annual report and conduct a site visit if deemed necessary.

Technical Cooperation

Legal and Regulatory Development TC to support further broadening of market liberalisation and to help counter potential competition issues that may arise from Aztelekom's project, the team will look to support the Ministry of Transport, Communications and High Technologies in the review and revision of the legal, regulatory and institutional framework for the sector, with revisions from this review likely to include the strengthening of laws and ensuring the presence of effective competitive safeguards. The team intends to provide the first phase of support in parallel with the project. Support activities will include a review of the sector and identification of relevant best international practice, together with recommendations for changes that should contribute to more efficient use of existing broadband infrastructure and attraction of investment into the roll-out of new broadband infrastructure. Phase one is expected to cost approximately EUR 74,000. The project has been identified for priority funding in the 2019-20 Shareholder Special Fund work plan.

Procurement and Technical TC: the EBRD has appointed an experienced independent consultant to assist the company to run the procurement process in line with the Bank's PPR. Total costs are estimated ca EUR 50,000 and will be funded through the Shareholder Special Fund.

Company Contact Information

Ilgar Nahmadov
ilgar.nahmadov@aztelekom.az
+99450 210 3353

Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794
Email: procurement@ebrd.com

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Email: projectenquiries@ebrd.com

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