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CASPIAN TELECOMS 2010 CONFERENCE 28-29 April 2010 Istanbul

CASPIAN TELECOMS 2010 CONFERENCE 28-29 April 2010 Istanbul. I. The European Bank for Reconstruction and Development (EBRD) II. EBRD regional presence III. Telecoms, Informatics and Media Team IV. Current state of the Telecoms, Media & Technology market V. Conclusions and Contacts.

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CASPIAN TELECOMS 2010 CONFERENCE 28-29 April 2010 Istanbul

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  1. CASPIAN TELECOMS 2010 CONFERENCE 28-29 April 2010 Istanbul

  2. I. The European Bank for Reconstruction and Development (EBRD) II. EBRD regional presence III. Telecoms, Informatics and Media Team IV. Current state of the Telecoms, Media & Technology market V. Conclusions and Contacts Outline

  3. I. Introducing the EBRD • AAA-rated multilateral institution founded in 1991 • Promotes transition to market economies in 30 countries from central Europe to Central Asia • The largest lender and private equity investor in the region • Owned by 61 countries and two inter-governmental institutions

  4. EBRD at a glance • Capital base of €20 billion places EBRD amongst the world’s largest financial institutions • With capital exceeding asset base EBRD has the resources and commitment to: • strongly increase investments across its sectors of operation; and • continue to assist its clients changes in economic conditions notwithstanding Cumulative commitments €47 billion Unaudited January 2009

  5. EBRD in 2009 … • Private sector > 77% of portfolio • Debt 78%, Equity 22% of portfolio • €8.1bn invested in 2009 • Invested over €47bn in more than 2,700 projects since 1991

  6. Net cumulative volume by sector Financial Institutions 34% Transport 13% General Industry 13% Power & Energy 9% Agribusiness 9% Natural Resources 5% Property & Tourism 4% Telecoms 7% MEI 6%

  7. Active in all countries of operations Cumulative commitments €47 billion Southeast Europe 21% Central Asia 7% Central Europe & Baltics 29% Russia 27% Eastern Europe & Caucasus15%

  8. EBRD’s Objectives To foster the transition of 30 countries from Central and Eastern Europe to Central Asia towards open market-oriented economies • To promote transition to market economies by investing mainly in the private sector • To mobilise domestic and foreign capital: multiplying effect • To foster a competitive environment • To stimulate and encourage the development of capital markets • To encourage environmentally sound and sustainable development Focus on quality, efficiency, concrete results and return on investment (financial, economic, environmental)

  9. In its Operations, EBRD • Follows Sound Banking Principles • Supports but does not replace private investors • Promotes market-oriented changes in its clients and reforms in sectors or the whole economy • Encourages environmentally sound and sustainable development

  10. Equity and equity-linked instruments Small equity positions as part of project financing Private equity placements IPOs and secondary equity offerings Investments in equity funds Debt Project finance or corporate loans Senior debt Lender of record status for syndicated loans Subordinated debt … Offering a Wide Range of Products ... A long-term partner for clients, NOT a fee-driven advisor or speculative investor

  11. Funding Principles • EBRD is a flexible, commercially-oriented provider of funding, which is partly or wholly unavailable from commercial banks. • EBRD provides funding independently or as a lead or co-lead arranger in banking syndicates. EBRD has extensive syndication experience. • EBRD funds up to • 35% of total project costs for a greenfield project • 35% of long-term capitalisation of an established corporate

  12. EBRD Preferred Creditor Status EBRD’s Preferred Creditor Status • EBRD has Preferred Creditor Status in respect of transfer and convertibility risk (Art. 21 of theAgreement Establishing the EBRD) • Tested in Russia, August 1998 - Payments to EBRD were exempt from the transfer and convertibility moratoria • EBRD Loans are: • not subject to restrictions on conversion of local currency or transfer of foreign currency • not included in any general rescheduling of the country’s foreign currency debt • generally exempt from country provisioning requirements • exempt from withholding tax on interest

  13. EBRD A / B Loan Structure • EBRD acts as a lender of record for the entire syndicated facility • EBRD retains at least 35% of the loan for its own account • EBRD receives payments and passes them on to syndicate participants • Improved financing terms through syndicate’s access to Preferred Creditor Status Loan Participants Participation Agreement EBRD Loan Agreement Borrower

  14. II. EBRD regional presence

  15. A network of 36 offices in 30 countries More than half our bankers based in the region

  16. Now in Turkey In October 2008 the EBRD’s shareholders decided to accept Turkey as country of operations Istanbul office has been opened in 2009

  17. III. Telecoms, Informatics and MediaTeam (TIM) Visit us at: www.ebrd.com/telecoms.htm

  18. Where are we at the EBRD? • Telecoms, Informatics and Media Team • Key sector for the EBRD • 7% of cumulative commitments • Dedicated team of 12 bankers

  19. Telecom/Media Team Portfolio • Cumulative financing to date: €2.8 billion • Current portfolio: €0.8 billion • Over 125 deals ranging from a few million to hundred million EURO in 29 CEE/CIS countries Projects include: • Mobile telecoms operators • Fixed line operators • ISPs • Submarine cables operators • Terrestrial TV • Cable TV network operators • Outdoor advertising • Print media • Software developers • Systems integrators Fixed line/Integrated Telcos 41% Mobile 35% Media/Other 24%

  20. Selected Transactions Albania 2008 Privatisation - Loan syndication € 100 million (total) € 30 million (own account) Russia 2004, 2006 and 2008 Loan facilities up to EUR 420 million (total) EUR 115 million (own account) Romania 2007 Loan syndication € 50 million (total) € 30 million (own account) Kazakhstan 2003 Loan syndication $110 million (total)$60 million (own account) Bulgaria 2004 Privatisation-Equity, Debt and Mezz Equity: EUR 138m; Debt: EUR 196m Mezzanine: EUR 40m (totals) Equity: EUR 17m; Debt: EUR 70m Mezzanine: EUR 3.5m (own account) Georgia – Bulgaria 2008 Loan and equity $ 35million (own account) Kazakhstan 2005 and 2007 Loan syndication for KaR-Tel $130 million (total) $65 million (own account) Albania 2003 Loan syndication €85 million (total) €35 million (own account)

  21. Selected Transactions: Media Poland 2003 Acquisition debt €52.5 million (total) €22.5 million (own account) Ukraine 2007 Equity €22.2 million Czech Republic 2002 Acquisition debt $35 million (total) $10 million (own account) Regional CEE/CIS 2008 Equity € 40 million Romania 2003 Debt Co-financing $11 million (total) $7 million (own account) Russian Federation 2003 to 2005 Loan syndication $130 million (total) $ 90 million (own account) Regional CEE 2006 Loan syndication $100 million (total) $ 50 million (own account) Hungary 1997 Loan syndication $28 million (total) $14 million (own account)

  22. IV. Current state of TMT sector Source: AP

  23. State of TMT sector • The sector generally proved to be resilient to economic downturns and has shown recovery ahead of other sectors and the economy as a whole. • Decrease in consumer’s disposable income, affected the MOU of mobile operators, renewal of IT durables, but not to the extent expected. • Corporate and Public sector IT budgets reduced to free up liquidity but expected to start coming back to pre-crisis levels over 2010-2012. • Adjacent markets such as advertising has slowed significantly. • TMT sector, being an active user of debt finance, in general managed to extend the maturities or refinance in late 2009 and early 2010.

  24. Current opportunities in TMT Sector, EBRD as a partner • EBRD will continue supporting TMT sector in its investment into various broadband access technologies, both wireless and wireline. • A majority of TMT market players agree that innovation seems to be a strategic lever to recoup. Even during the crisis, people are ready to pay for innovative/disruptive offers: operators should increase their focus on customer value during crisis. EBRD can bring its experience into the innovation projects. • EBRD is not a speculative short-term investor, all projects are of long-term value creation nature. • The Bank expects to see increase in M&A activity and some shift towards strategic investor driven deals versus private equity investor as well as the shift in value creation tactics away from financial restructuring and towards operational improvements – clearly favours companies who know how to drive these synergies.

  25. V. Conclusions and Contacts

  26. Conclusions • EBRD is the single largest long-term lender and equity investor in the CEE and CIS. • Transactions are tailored to the needs of clients and a variety of financial structures can be considered. • Non-standard structures are welcome. • Despite the recession EBRD remains committed and open for business.

  27. Contacts Aziz Muminov Telecoms, Informatics and MediaSenior Banker tel: +7 495 787 1111 e-mail : MuminovA@ebrd.com

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