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ADB to Help Expand Cellular Phone Services in Afghanistan

KABUL, AFGHANISTAN (6 April 2005) - The Asian Development Bank (ADB) will help improve telecommunications in Afghanistan through a US$35 million loan signed today to finance the nationwide expansion and upgrading of the country's leading cellular network.

The project will use global system for mobile communication (GSM), cellular, satellite, and radio wave transmission technologies to extend the coverage of Roshan, a private limited liability company that provides cellular telephone, public call office, international gateway, and Internet services in Afghanistan.

The project will help expand Roshan's coverage towards its ultimate goal of countrywide coverage and will help fund the deployment of public call offices which extend the reach of telecoms to the less affluent and more remote users.

The agreement was signed at a ceremony in Roshan's Headquarters in Kabul by Robert Bestani, Director General of ADB's Private Sector Operations Department, and Karim Khoja, Chief Executive Officer of Roshan. His Excellency, Minister Sangin, the Minister of Communications officiated.

"Our agreement with Roshan, the first significant loan of its kind to be made to a privately owned enterprise in Afghanistan in almost 30 years, will strongly support Afghanistan's reconstruction effort and economic development," said Michael Barrow, an ADB Senior Structured Finance Specialist.

"Telecommunications is an essential element of a country's infrastructure, alongside transport, water supply, and energy, and cellular telephony is seen as the only viable method of providing reliable, countrywide communications coverage in the country."

After 23 years of conflict, Afghanistan is left with no functioning national fixed line telecommunications service, a barely functioning postal service, and poor roads. Cellular networks are still embryonic and require significant additional investment, particularly if they are to reach beyond the major cities.

The pent up demand for telephony services is evidenced by subscriber numbers significantly exceeding original projections. This indicates that the demand for cellular phone services will likely increase rapidly over the next few years.

Despite the strong business case, however, private sector development in Afghanistan is constrained by the limited availability of funds.

"ADB's loan to Roshan will hopefully serve as a positive example that should help encourage aid agencies and commercial sector lenders to support private sector development in Afghanistan," said Mr. Barrow.

Roshan is ultimately owned by the Aga Khan Fund for Economic Development, Monaco Telecom International which is majority owned by Cable and Wireless plc UK and US-based MCT Corporation.

"Today's signing is monumental not only for Roshan, but for the continuing growth and development of a nation that has been swept by war for almost three decades," said Mr. Khoja.

"Roshan's growth, development, and success mean growth, development and success for all the people of Afghanistan."

ADB's loan is without government guarantee and comes from ADB's ordinary capital resources. Interest is determined in accordance with ADB's LIBOR-based loan facility.

Societe de Promotion et de Participation Pour La Cooperation Economique (Proparco) will also provide a $10 million loan. Signing the Proparco agreement was the company's legal adviser, Olivier Fourcade.

The Asian Development Bank is dedicated to reducing poverty in the Asia and Pacific region through pro-poor sustainable economic growth, social development, and good governance. Established in 1966, it is owned by 63 members, with 45 from the region.

More at adb.org/media

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