The role of multilaterals in LatAm’s main ICT initiatives

Given the huge demand for internet and telecommunication services, particularly through complex and costly projects involving data transport infrastructure, Latin America has a series of financing processes underway in the field of ICT.

They are aimed at network building and expansion, product development and portfolio upgrades, among others. 

Financing instruments range from letters of credit to loans and guarantees by investment banks and export credit agencies.

BNamericas takes a look at some of the main recent financing announcements in the sector, with information from IDB, IDB Invest, CAF and IFC.

ARGENTINA

Federal Innovation Program

IDB is analyzing a loan of US$230mn for a federal innovation program budgeted at US$287mn, according to documents on the regional development bank's platform.

According to IDB, the specific goals of the program are to increase private investment in innovation; boost the national knowledge production effort; and to improve institutional capacities to design and implement science, technology and innovation policies.

Refefo

Also in Argentina, IDB is considering a US$100mn loan request to support the new expansion stages of the country’s federal fiber backbone, Refefo.

The Refefo network is being enlarged by the Alberto Fernández administration under a new national connectivity plan, known as Plan Conectar. The overall goal is to expand connectivity to underserved regions.

The specific objective of the program, says IDB, is to improve infrastructure for digital connectivity in areas far from urban centers and increase data storage capacity.

Digital inclusion and Arsat satellite

Latin American development bank CAF approved in December three operations worth US$544mn to increase internet coverage and quality in remote areas, drive digital and educational transformation, and revamp urban infrastructure through works on roads, sewerage networks and related to wastewater, among others.

Of the total, US$243mn is aimed at the development, manufacturing, launch and orbiting, as well as the operation, of the country's new geostationary satellite, ARSAT-SG1 (formerly Arsat-3).

The operation is expected to benefit 200,000 rural households in Argentina and 80,000 rural households in Bolivia, Chile and Paraguay, according to CAF.

The Argentine government says its launch is due in 2023.

The satellite was originally scheduled to be launched in 2019, but the project was put on hold by the previous Mauricio Macri administration. Last year, President Fernández decided to resume Argentina’s satellite program, including construction of SG1.

BRAZIL

RecargaPay

IDB Invest is considering an equity investment of US$10mn in Brazilian digital wallet RecargaPay. 

The company operates a mobile money platform integrated into payment and banking ecosystems. 

According to IDB Invest, RecargaPay is also in the process of a series C financing round, targeting up to US$70mn to enable further customer acquisition and new product launches.   

COLOMBIA

Tigo

IDB Invest approved in March a 625bn Colombian peso (US$168mn) facility loan to Millicom’s Tigo.

Resources will be used to expand the 4G LTE network in rural and underserved areas in the country, as well as to support the company’s spectrum acquisition and network deployment plan.

IDB Invest will issue letters of credit to local banks in order to cover Tigo’s obligations under certain security issued by the banks in favor of the ICT ministry (MinTIC) and ICT fund FonTIC.

DOMINICAN REPUBLIC

Program to Improve Connectivity for Digital Transformation 

The Dominican Republic government is awaiting approval of a US$115mn loan from IDB for its new connectivity push. 

The program is to be executed by market regulator Indotel and is heavily centered on the fiber and transport network. Financing is being analyzed by IDB.

The program has as goals improving national connectivity through investment in digital infrastructure, boosting broadcasting services, and increasing digital skills and competencies, including a gender focus, according to the bank.

EL SALVADOR 

Social Digital Connectivity Program

Another connectivity initiative in the study phase, El Salvador's Social Digital Connectivity Program could be eligible for US$50mn in financing from IDB.

The goal of the program is to increase access of citizens to fixed and mobile broadband and support continuity of public services, says the bank. 

The program is aimed at improving access to connectivity through investment in digital infrastructure and institutional strengthening; and reducing the digital skills and competencies gap.

ECUADOR

Phoenix Tower International Ecuador

The Ecuadoran subsidiary of telecom infra group Phoenix Tower International secured last June a long-term financing of US$110mn from IDB Invest to support its shared infrastructure business model, kickstarted by the acquisition of Telefónica’s Movistar towers.

The financing consisted of IDB group A-loans of up to US$80mn and a potential co-loan of US$30mn by IDB Invest.

Headquartered in Florida, PTI reports over 86,000 sites (towers and distributed antennas) in 14 countries, most of which are in Latin America. In Ecuador, the company has over 1,500 sites.

GUATEMALA

Program for the Digital Transformation of Guatemala for Inclusive Access to Connectivity

After months of analysis, IDB approved in March a US$70mn loan for Guatemala's national connectivity program.

The program has as objectives improving connectivity through investment in digital infrastructure; improving the adoption conditions of solutions for digital infrastructure; and increasing the institutional and operative capacity that will allow the development a digital agenda, IDB says.

JAMAICA

Facey Group

IFC approved in March a corporate loan of up to US$15mn to provide liquidity to ICT company Facey Group.

The loan is aimed at supporting the company and its subsidiaries to "continue weathering the COVID-19 pandemic and fuel working capital needs as the group recovers to pre-pandemic levels and beyond," says IFC.

Founded in 1926, Facey Group is a value-added distribution, services and telecom company operating in Central America and the Caribbean. 

The company is headquartered in Jamaica and operates in over 30 countries.

MEXICO

Megacable 

Cable operator and internet provider Megacable secured a US$20mn credit facility from IDB Invest.

Through the transaction, IDB Invest seeks to facilitate access to financing for Megacable’s MSME suppliers in Mexico, through the discount or monetization of credit rights arising from the sale of goods and/or services.

Megacable's supply pool in Mexico comprises over 5,000 companies, says IDB Invest.

QMC Telecom

Telecom infra company QMC Telecom was granted a long-term, guaranteed financing of up to US$45mn to support investment in shared telecommunications infrastructure in Mexico and working capital in Mexico, Colombia and Peru.

QMC's subsidiaries in each country will be the borrower or guarantor of the financing, IDB Invest said.

QMC owns and operates over 2,400 wireless sites in Brazil, Colombia, Mexico, Peru and the US (including Puerto Rico).

PANAMA

Digital Transformation and Inclusion Strategy Aid Program

CAF approved in March a US$350mn loan to support the nation’s digital transformation and productive sector, as well as to close digitization gaps.

According to the LatAm financing agency, the program is aimed at the production and implementation of standards, plans, internal agreements and investments in the following axes: public policies for the digital economy; digital transformation of the state; development of digital industries; digital transformation for productivity; and deployment of connectivity infrastructure and digital inclusion.

PERU

Pacific Alliance

CAF also pledged non-reimbursable technical cooperation to Peru to streamline Pacific Alliance's AP-NET digital management platform.

The agreement was signed by Peru’s foreign minister Elizabeth Astete Rodríguez and CAF executive president Luis Carranza Ugarte.

The amount involved was not disclosed.