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The Multilateral Investment Guarantee Agency (Miga), a member of the World Bank Group, will provide US$78mn in insurance to Orascom Telecom Holding of Egypt for its investment in a mobile telephone network in Bangladesh.
The guarantee is for 15 years and will protect the investment against the risks transfer restriction, expropriation, war and civil disturbance.
Orascom’s investment involves the expansion and improvement of Sheba Telecom (Pvt) Ltd, a national mobile telephone network purchased in September 2004. The network, operating under the name Banglalink, is based on GSM technology.
Bangladesh has one of the world’s lowest teledensity rates, with less than 1% of its citizens having access to a telephone. Landline telephony is exorbitantly expensive for the majority of Bangladeshis, with connection charges as high as US$150 and the waiting time for a connection averaging a year.
“We are seeing increased interest in mobile telephony in developing countries,” says Philippe Valahu, head of Miga’s Infrastructure unit. “In contrast with much of the fixed-line infrastructure, the new technology offers consumers an affordable and reliable service.”
The subsidiary has already added some 200,000 customers, thanks to its competitive pricing, free handsets, introduction of prepaid services, and improved infrastructure. Sheba’s entrance into the market has led to an estimated rate reduction of 25-30%.
“What is exciting is that mobile phones have significant development impacts beyond consumer ownership, such as enabling better and cheaper in-formation exchange for smaller companies and entrepreneurs both in urban and rural areas,” says Valahu. “The additional investments made by the project are expected to increase the development of commerce throughout the country through greater coverage and better access.”
Sheba employs around 350 local staff and around 2,000 people indirectly through dealers. The company also has an extensive training pro-gram and is planning a management training programme for local staff as well.