IFC rings US$ 100 m boost for Dialog Telekom

Extends $ 70 m long term loan and agrees to buy 1.6% stake for $ 30 m in World Bank private sector arm’s biggest ever Lankan deal

Dialog Telekom CEO and Director Dr. Hans Wijayasuriya (fourth from left) and IFC Sri Lanka and Maldives Country Manager Gilles Galludec exchange the agreement. Others from left are Wan Zaidan Wan Mahyudin - Chief Financial Officer, Dialog Telekom PLC, Yusof Annuar Bin Yaacob - Chief Executive Officer, TM International Sdn Bhd, Dr. Sarath Amunugama - Minister of Enterprise Development and Investment Promotion, Jeethendra Marcelline  Head, Investments, IFC Sri Lanka and Maldives, and, Walid Labadi - Legal Counselor IFC

World Bank’s private sector investment arm International Finance Corporation (IFC) on Monday announced a US$ 100 million investment in Sri Lanka’s premier mobile telecom operator and most profitable corporate Dialog Telekom.

The two signed a long-term financing agreement which will facilitate the expansion of Dialog’s network and infrastructure.

The IFC, would afford Dialog Telekom a long-term loan facility of US$ 70 million, and a US$ 30 million equity commitment via the acquisition of a 1.6% holding in the company from Telekom Malaysia (TM).

As part of the agreement on Monday in a deal worth Rs. 1.7 billion IFC picked up 0.7% stake or 64 million shares of Dialog at Rs. 26.50, up by Rs. 2.75 from the previous close.

Dialog Telekom says the funds would enable it to improve public access to “affordable and reliable telecommunication services”, with increase in capacity and coverage – particularly to rural areas. The equity commitment would also facilitate a potential improvement of liquidity for Dialog shares in the market. Investments would also be made in the fixed-line, broadband and digital television media business. “These beachhead investments would establish a solid platform for the Dialog Group to benefit from the burgeoning mobile market as well as from growth in relatively under-served segments such as broadband internet, enterprise solutions, fixed telephony and digital media; leveraging on infrastructure and converging technology platforms,” a company release states.

During the signing ceremony, IFC Country Manager Sri Lanka And Maldives, Gilles Galludec, revealed that this was the largest such facility afforded in the country . Touching on the growth and potential of the telecommunication sector in Sri Lanka, Galludec added that Dialog Telekom is a key partner in Sri Lanka given its credibility, company strategy and country-wide entrepreneur development programme.

Through its South Asia Enterprise development Facility, IFC would also afford the mobile solutions provider assistance with implementing a Distributor Retailer Community Network.

This would involve imparting “better business skills” to retail distributors to help them access credit from commercial banks to improve sales.
Dialog Telekom CEO, Dr. Hans Wijeyasuriya, remarked he was encouraged that IFC has increased its participation in Dialog – following the long-term financing agreement of 2004 – and appreciative of the high-degree of market sensitivity displayed by the financier in structuring a tailor-made financing package.

Minister Of Enterprise Development And Investment Promotion, Dr. Sarath Amunugama, pointed to the growth in the services sector in the overall economic context, adding that communications industry holds most promise. He mused that much of Sri Lanka and some of its industry is still “languishing in the 19th century, and perhaps some in the mid 20th century,” and it was telecom that is really taking steps into the 21st century. Amunugama predicts that the local sector has the potential to become a USD 1 billion industry together with apparel, leisure and telecommunications.