Announcement of Sixteen Million US Dollars Loan to Guatemala for Telecommunication Expansion on December 23, 1971

• !' ic. ; ff . 'i • i.:; 181 8 H STREET, N .w., WASHINGTON D. C. 2043 3 TELEPHONE: EXECUTIVE 3-6360 Bank Press Re~.e.;i.:;..e No. 71/89 Subject: $16.0 million loan to Guatereala December 23, 1971 for telecommunication expansion A comprehensive program to improve telecommunication services in Guatemala in the 1971-1975 period will be undertaken with the assistance of a World Bank loan of $16.0 million. Development of telecommunicati.ons in Gua.temsla hac lagged behind demand. As a result, existing lo~al and long distance facilities are inadequate to meet current needs. The 1971-75 Development Plan recommends a five-year expatlsion program to improve and expand local end long-distance telecommunic~- tions and reorganize the sector • • In April 1971, the Guatemalan Government merged the existent entities into one autonomous agency, the Empresa Guatemalteca de Telecomunicaciones (GUATEL) to be responsible for all publ!c telecommunication_services ~n Guatemala except for the existing domestic telegraphic system, which was incoq,orated intt.> the· national postal systems. Primarily, the project includes installation of about 35,000 lines of local exchange equipment; the provision of approximately 35,000 additional direct exchange connecticns; and the installation of long-distance equipment including microwave systems between Guatemala City and three major provincial cities. The estimated total cost of the project is, $21.2 million -- the Bank loai, covering the foreign exchange cost. The project, which is very high in the • Government's priorities, will ueet part of the projected demand for telephone /uv:,re Bank P.R. 71/89 -- Guatemala -- telecom. • - 2 - connections and will alleviate congestion and delays in the domestic long- distance traffic. The long-distance facilities included in the project, together with those being financed by the Central AmP.rlcan Bank for Economic Integration (CABEI) as part of a regional project, will for the first time pro·vide adequate long-distance domestic and intemational service. Theloan is being made to GUATEL with the guarantee of the Republic of Guatemala, for a term of 20 years, including five years of grace, with interest at 7Ja per annum. Five financial institutions are participating in the Bank loan for a total of $700,000 equivalent. They are: Franklin National Bank, New York; Security Pacific National Bank, Los Angeles; The Tokai Bank, Limited, Nagoyat • Bank of America, New York; and Crocker National Bank, San Francisco. -o- • i'- • I • December 23, 1971 TECHNICAL DATA PROJEcr: Telecommunications COUNTR~ Guatemala TOTAL COST: $21.2 million BANK FIN..A.NCING: $16.0 million, 20 years, including 5 years of grace:. 7~ interest. OTHER FINANCING: Intemal cash generation. IMPLE~£NTING ORGANIZATION: Empresa Guatemalteca de Telecomwticaciones (GUATEL), Guatemala City, Guatemala; Cable address: GUATEL. PllbJECT DESCRIPTION: . ,Increase the capacity of existing and new local telephone exchanges by about 3.5 ,000 lines; expansion of cable distribution and subscriber facilities to provide approximately 35,000 direct exchange connections; installation of long-distance systems including a backbone microwave system and related automatic • trunk switching equipment • PROCUREMENT: Switching equipment, subscribers equipment, cables, and radio tra.,smission equipment for local and long-distance systems. International competitive bidding, except for additions of switching equipment to existing exchanges estimated to cos.t about $1 million. Suppliers in the Central American Common Market will be allowed a preference of 15% of the c.i.f. price or 50% of the customs duty, whichever is lower. CONSULTANTS: None ESTIMATED COMPLETION DATE: Before end of 1974. ~'-O - •