China Development Bank lends $105 million to Congo-Chine Télécoms (CCT) to pay for ZTE's services in 2007 (Linked to Project ID#382 and #95662)

On December 14, 2000, the Export-Import Bank of China signed a RMB 80 million ($9,664,765.67) concessional loan agreement with the Ministry of Finance of the Democratic Republic of Congo (DRC). The proceeds of loan, which is captured via Project ID#382, were used to support the creation of joint venture between ZTE and the Congolese Office of Post Telecommunications (OCPT) in Kinshasa, called Congo-Chine Télécoms (CCT) or Congo-China Telecom S.A.R.L. (CCT) (Chinese name: 刚中电讯有限公司). ZTE held a 51% equity stake in the joint venture, and OCPT held a 49% equity stake. Most of the loan proceeds were used to be used by the borrower to acquire equipment from ZTE and thereby build CCT’s telecommunications network in the DRC. According to the Aid Management Platform (AMP) of the Government of the Democratic Republic of Congo, the loan achieved a 100% disbursement rate ($9,665,149.43 out of $9,664,765.67). CCT launched GSM-900/1800 services on December 31, 2001 in Katanga in the east of the country. It subsequently rolled out services to Kinshasa, Bas-Congo, Bandundu and the two provinces of Kasai, giving it coverage in 40 cities. The CCT network, at the time, had a capacity for 150,000 customers, with a single switch in Kinshasa, and it used a Belgacom earth station for its international gateway. Then, on March 11, 2006, ZTE Corporation signed a sales contract and a service contract with Congo-Chine Télécoms (CCT) worth $123 million. On June 29, 2007, the China Development Bank (as arranger, initial lender and facility agent) signed the Phase I and Phase II loan facility agreements with CCT (as borrower). The aggregate loan amount was $105 million (covering Phase I with $63 million and Phase II with $42 million). The proceeds of the loan, which is captured via Project ID#60113, were to be used to finance CCT’s payments to ZTE Corporation worth 85% of the cost of the 2006 sales and service contract. The 2007 loan was guaranteed by the ZTE Corporation's 51% equity interest (see Project ID#383) in Congo-Chine Télécom (CCT). The Ministry of State-owned Enterprises of Congo (Kinshasa) provided a counter-guarantee by pledging its 25% equity interest in CCT. The loan was also secured with (i.e. collateralized against) fixed assets purchased by the borrower with the loan proceeds. Then, on October 20, 2011, France Telecom-Orange (FT-Orange) acquired a 100% ownership stake in CCT (the majority of which was assumed debt), buying the 51% ownership stake held by the ZTE Corporation and the 49% ownership stake held the Congolese State. Under the terms of a share purchase agreement signed with ZTE Corporation, FT-Orange agreed to pay $10 million (EUR 7 million) to the Chinese equipment manufacturer for its 51% stake in CCT. Under the terms of a share purchase agreement signed with the Government of the Democratic Republic of Congo (after a call for tenders), FT-Orange agreed to pay $7 million (EUR 5 million) to the Government of the Democratic Republic of Congo for its 49% stake in CCT. CCT was renamed ‘Orange RDC’ and the Orange brand was introduced to the DRC on December 6, 2012. As part of the October 2011 acquisition, Orange RDC (formerly Congo Chine Télécoms or CCT) signed a $276,250,000 loan agreement with China Development Bank (captured via Project ID#95662). The proceeds of the loan were to be used by the borrower to repay the outstanding (assumed) debts of CCT and to expand CCT’s existing telecommunications network. In the last quarter of 2011, FT-Orange also announced that ZTE Corporation would provide it with infrastructure and services as a preferred supplier, drawing upon ‘strategic financing support’ from China Development Bank. Following the October 2011 acquisition, FT-Orange invested CDF 87.4 billion ($89.6 million) to expand and enhance CCT’s telecommunications network, including an upgrade to 3G. Orange RDC had 1.8 million mobile customers as of December 2012. By the end of 2014, Orange RDC had 14.3 million mobile customers.

Additional details

1. Neither CDB loan is included in the database of Chinese loan commitments that SAIS-CARI released in July 2020. Nor is either loan included in the China’s Overseas Development Finance Dataset that Boston University's Global Development Policy Center published in December 2020. 2. On November 8, 2007, ZTE entered into a supplier’s share pledge agreement with the agent bank of China Development Bank in DRC, pursuant to which ZTE provided pledge of share in respect of the said $105 million bank loan extended to CCT on the back of its 51% equity interests in CCT. The guarantee was considered and approved at the Seventh Meeting of the Fourth Session of the Board of Directors and the Third Extraordinary Meeting for 2007 convened by ZTE on August 16, 2007 and October 16, 2007, respectively. Pursuant to a Sale and Purchase Agreement, France Telecom-Orange agreed to provide capital contributions to CCT on the completion date for the Sale Shares, and the funds were to be applied towards prepayment of all loan balances under the two $63 million and $42 million facility agreements with China Development Bank. China Development Bank agreed to sign a series of documents with the parties on the same date of the loan repayment, terminating the $63 million and $42 million facility agreements and the share pledge agreement, releasing CCT and ZTE from all obligations under the facility agreement and the share pledge agreement as well as releasing Share from the aforesaid pledge. 3. At the end of 2008, CCT was the smallest of DRC’s four wireless network operators, with just over 115,00 customers or 1% of the total subscriber base. It was competing, at the time, with Vodacom (with 47% market share at the same date), Zain (38%) and Millicom International Cellular’s Oasis (Tigo, 12%). 4. Some sources indicated that on October 21, 2011 ZTE sold its 51% equity stake in CCT to Pan Communication Investments and Atlas International Investments (both of which are wholly-owned subsidiaries of France Telecom) and that the transfer of equity ownership was completed on the same date.

Number of official sources

2

Number of total sources

14