Support for Venezuelan telecommunications

(Caracas, January 21, 1999).– To strengthen the private infrastructure of Venezuela, CAF today signed in a loan agreement for US$34.2 million with the company INFONET, Redes de Información CA, structured under the syndicated A/B loan facility, with the participation of the KFW agency of Germany.

The loan – at seven years – will partially finance the investments needed to execute a wireless telecommunications service project in the western region of the country, especially rural telephony.

CAF President & CEO Enrique García – who signed the operation with Horacio González, president of the Board of Directors of INFONET – said the project was under the A/B loan facility, a cofinancing instrument which has permitted the institution to expand its offer of financial products to the private sector, as well as attracting investments from other financial institutions interested in channeling their contributions through CAF.

García emphasized the high social content of the operation because it will help raise the standard of living of the population in the area of the project, and cover communication needs in less developed remote rural areas, which do not have any tools for their economic and social integration with the rest of the country.

Finally, he said CAF was supporting the transfer from the public to private sector of certain economic activities by means of concession agreements which governments grant to the private sector for their participation in the construction, maintenance and management of infrastructure.

The wireless telecommunications project will take this service to the states of Apure, Barinas, Lara, Mérida, Portuguesa, Táchira, Trujillo and Zulia under the concession granted by the Venezuelan government in January 1997.

Under this concession, INFONET will be able to provide basic rural telephony service to localities with less than 5,000 inhabitants for 20 years, as well as mobile telephony and other telecommunications services such as private networks, satellite communication, vehicle localization and telemedicine in all the region.

The project began in 1997 with investments of US$24 million. The total cost is approximately US$82.4 million to be developed over four years.

CAF is an international financial institution whose mission is to support the sustainable development and integration of its shareholder countries. It is formed by the five nations of the Andean Community, together with Brazil, Chile, Mexico, Panama, Paraguay and Trinidad and Tobago.