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IFC grants Spanish telco’s local unit a $75 million loan to pay second instalment of spectrum fee and expand mobile broadband services.
Telefonica’s Ecuadorian unit has brokered a loan deal worth US$75 million with the World Bank’s private sector arm that will amongst other things enable it make its next payment for 4G spectrum won last year.
The International Finance Corporation (IFC) announced on Monday that the loan will also help Otecel, which operates under the Movistar brand, expand its mobile broadband services in the country, particularly in under-served regions.
"Otecel thanks IFC for the confidence that it has shown and which allows it to meet its obligations to the state with respect to the 4G LTE spectrum concession," said Telefonica Ecuador CEO José Manuel Casas, in a statement.
Otecel and America Movil’s Claro together agreed to pay $330 million for 50 MHz and 60 MHz of 4G spectrum respectively a year ago.
The loan is designed to help Telefonica make the second of three payments for the spectrum. The final payment is due towards the end of this year.
"We are proud that our 4G LTE network is now the largest in Ecuador, as our commitment is to deliver technology and the possibility that it brings to more and more people," Casas said.
The IFC said its latest investment will be key to supporting the Ecuadorian economy.
"For IFC, supporting the development of the telecommunications sector is vital for promoting growth in emerging economies," said Guillermo Mulville, who heads the IFC’s telecom team for Latin America and the Caribbean.
"A number of studies have demonstrated that a 10% increase in broadband coverage can lead to an increase of 1.5% in a country’s gross domestic product," he added.
Telefonica’s Otecel is the second largest mobile operator in Ecuador, serving around 5 million people. Claro claimed 8.66 million customers at the end of 2015.
