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IDB approves US$300 million for telecommunications project in Brazil

The Board of Directors of the Inter-American Development Bank today approved financing for a total of US$300 million to Empresa Brasileira de Telecomunicações S.A. (Embratel), the Brazilian telecommunication service provider, to support its 2006-2007 capital expenditure program.

The IDB financing will include an “A-loan” of up to US$80 million from the Bank’s ordinary capital and a syndicated “B-loan” of up to US$220 million, consisting of resources from financial institutions that subscribe participation agreements with the IDB.

Embratel is the main operating company held by Embratel Participações S.A. (Embrapar), which in turn is controlled by Teléfonos de México S.A. (Telmex). The group’s portfolio includes local and long distance telephony, Internet and corporate data services, satellite communications and cable television.

“The group’s strategy of diversifying its services has been triggered by increasing competition and is in line with the industry trend of convergence,” said IDB Team Leader Jean-Marc Aboussouan of the IDB Private Sector Department.

The company’s capital expenditure program includes investments for the installation of a 900 kilometer fiber optic cable from Porto Velho to Manaus, which will free satellite capacity to serve more remote areas of the Amazon region, and investments in  local telephony access, which will support the development of a competitive market in the local service segment.

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