Announcement of Ecuador Expands Telecommunications Network on May 8, 1989

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.* Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 89/57 Contact: Ciro Gamarra (202) 473-8721 ECUADOR EXPANDS TELECOMMUNICATIONS NETWORK WASHINGTON, May 8, 1989 -- The World Bank approved a $45 million loan to help finance rehabilitation and expansion of Ecuador's telecommunications network. The project, the first of its kind in Ecuador to be supported by the Bank, also supports institutional development of the Instituto Ecuatoriano de Telecomunicaciones (IETEL), the agency responsible for telecommunications services. Six countries, including Brazil and Mexico, will cofinance the $330 million project. In Ecuador, there are less than four telephone lines for every 100 resi- dents, compared with an average of seven lines per 100 inhabitants in all of Latin America. The quality of service is poor in both rural and urban areas. The telecommunications project includes extending local telephone service to 189,000 new subscribers, rehabilitating the cable network in Guayaquil to improve service to about 50,000 existing subscribers, and expanding the long- distance network. Telephone services will be extended to 76 rural communities. International telephone, telex and data services will also be expanded and modernized. Rural and business subscribers will be the primary beneficiaries of the network's expansion. But all subscribers will benefit from overall improved quality of service, particularly in Guayaquil where deterioration of the cable network is most severe. The project is expected to be completed by January 1995. The balance of the financing will be provided by IETEL ($120.1 million), the Commonwealth Development Corporation of the United Kingdom ($27 million), and bilateral funds and suppliers' credits from France ($47.2 million), Japan ($45 million), Mexico ($8.1 million), Brazil ($7.7 million), Spain ($6.7 million), and Italy ($5.7 million). Other suppliers will provide $17.5 million. The $45 million loan to IETEL, guaranteed by the Republic of Ecuador, is for 17 years, including five years of grace, with a variable interest rate, currently 7.65 percent, linked to the cost of the Bank's borrowings. It also carries an annual commitment charge of 0.75 percent on the undisbursed balance. NOTE: Money figures are expressed in U. S. dollar equivalents.