Translated version of this PSD: Georgian
Provision of up to USD 40 million senior Loan to MagtiCom, a leading telecoms operator in Georgia. Proceeds to retroactively finance the acquisition of a backbone service provider and regional Internet Service Provider in Georgia, Deltacomm ("Delta").
Delta with its substantial backbone infrastructure and wide geographical presence represents a strong strategic fit with the existing network giving MagtiCom attractive opportunities for regional expansion into underpenetrated areas. MagtiCom targets to enter 57 regions of Georgia to offer internet and Internet Protocol television (IPTV) services. MagtiCom has received permission for the acquisition from the regulator.
The project is expected to have a positive transition impact through supporting expansion through improving broadband penetration in the regions of Georgia and competition in the broadband internet market.This is important in the context of the relatively low national fixed broadband penetration of about 16per cent.
MagtiCom is a leading telecoms operator in Georgia and the only triple play operator providing a range of services including mobile, internet and IPTV. As of May 2017, the Company had 2.0 million mobile subscribers and 40 per cent subscriber market share in the mobile segment. Since its inception in 1996, MagtiCom has played a major role in development of networks such as GPRS in 2001, 3G network in 2006, satellite broadcasting in 2012, 4G/LTE network in 2015 and 4.5G technology in 2016.
EBRD Finance Summary
USD 40 million senior loan to MagtiCom.
Total Project Cost
Total Project cost cannot be disclosed due to confidentiality reasons.
Environmental and Social Summary
The project was categorized C under the 2014 Environmental and Social Policy. Telecommunication operations such as this project are unlikely to be associated with significant environmental or social impacts. Environmental and Social Due Diligence (ESDD) carried out for the previous project in 2016 is still valid and applicable for this project. Furthermore, the first annual environmental and social report provided in March 2017 showed that the previous project is in compliance with EBRD Performance Requirements (PRs).
The previous ESDD was based on a desk review of information provided by the Company via the completed environmental and social due diligence questionnaire, the Company's relevant documentation of internal procedures and a follow-on discussion with the Company's management team.
The previous project was expected to result in a substantial expansion of the client activities, including a 50% staff increase, such that the ESDD examined whether the existing policies and practice were appropriate for this significant expansion of operations. This was done by assessing existing corporate environmental and social management systems, implementation capacity and performance of MagtiCom, in addition to evaluating any potential environmental, health, safety, and social (EHSS) risks associated with the acquisition of the new assets and adequacy of the mitigation measures.
The ESDD did not raise any particular environmental and social concerns associated with the new assets, and MagtiCom has adequate processes and staff in place to manage environmental and social issues. However, the ESDD also identified scope for improving HR capacity and more systematic Environmental, Health, Safety and Social management procedures to support the Company's expansion. Specifically, the Company was required to develop a formal employment grievance mechanism, a public grievance mechanism in relation to electro magnetic fields and EU WEED Directive by strengthening the overarching Environment, Health and Safety management
system in compliance with national law as well as relevant EBRD Performance Requirements (PRs). The above mentioned annual report (March 2017) showed that the Company has developed and strengthened the formal grievance mechanisms and adequate overarching environmental, health and safety management system in compliance with PRs. The Bank will continue to monitor the Company's environmental and social performance against the PRs through the annual environmental report as well as a site visits if deemed necessary.
Company Contact Information
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Tel: +44 20 7338 7168
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