The Inter-American Development Bank (IADB) has approved financing for a total of US$300mn to Empresa Brasileira de Telecomunicaes (Embratel), the Brazilian telecommunications service provider, to support its 2006-07 capital expenditure programme.
The IADB financing will include an A-loan of up to US$80mn from the bank’s ordinary capital and a syndicated B-loan of up to US$220mn, consisting of resources from financial institutions that subscribe participation agreements with the IADB.
Embratel is the main operating company held by Embratel Participaes (Embrapar), which in turn is controlled by Telfonos de Mexico (Telmex). The group’s portfolio includes local and long distance telephony, internet and corporate data services, satellite communications and cable television.
“The group’s strategy of diversifying its services has been triggered by increasing competition and is in line with the industry trend of convergence,” says IADB team leader Jean-Marc Aboussouan of the IADB private sector department.
The company’s capital expenditure program includes investments for the installation of a 900km fibre optic cable from Porto Velho to Manaus, which will free satellite capacity to serve more remote areas of the Amazon region, and investments in local telephony access, which will support the development of a competitive market in the local service segment.