Bank of China provides $105.74 million loan for Phase 2 (Part 1) of Myanmar Communication Infrastructure Construction Project (Linked to Project ID#63665 and #63327)

On January 25, 2017, the Hong Kong Branch of Bank of China and Myanmar Fiber Optic Communication Network Co., Ltd. (MFOCN or 缅甸光纤通信网络有限公司) — a project company and subsidiary of HyalRoute Communication Group Ltd. (HyalRoute) — signed a $105.74 million loan agreement for Phase 2 (Part 1) of Myanmar Communication Infrastructure Construction Project. The borrowing terms of the loan are unknown. However, it is known that the project was financed according to a debt-to-equity ratio of 84:16, with Bank of China covering 100% of the debt component. MFOCN secured a corporate guarantee from HyalRoute Communication Group Limited for the loan from Bank of China and purchased credit insurance from the World Bank's Multilateral Investment Guarantee Agency (MIGA). Bank of China and MIGA signed the project guarantee agreement on January 25, 2017. MIGA provided two guarantees for Phase II covering the installation of a total of 8,500km of FOC backbone. MFOCN also pledged a bank account and fiber optic network assets (worth $150 million) as sources of collateral. The purpose of the Myanmar Communications Infrastructure Construction Project is to install a 62,000 km national fiber optic cable (FOC) network and 1,000 telecom towers over 3 phases. Phase 2 involved the construction of a 14,599 km of fiber optic cable network. Part 1 of Phase 2 involved the construction and maintenance of a 4,500 km underground fiber optic cable (FOC) backbone network, including 4,300 km of direct-buried backbone and 200 km of urban communication ducts, across 66 cities and towns. Construction of FOC involved digging a trench approximately 30-50 cm wide and 1.2 – 1.5 meters deep, laying the FOC and then back filling the trench. In urban areas FOC was duct buried, and in peri-urban and rural areas the FOC was directly buried. The FOC network included the construction of two types of ‘core facilities’, where FOC connected to communications equipment: type A (200 m2) and type B (60 m2). Both facilities included a base transceiver station (BTS), electricity transformer, backup generator and an area reserved for telecommunication towers (if required). Type A core facilities had an equipment laydown area and accommodation for the maintenance teams. Core facilities have a dual purpose: i) to provide greater capacity for the operators in the telecommunication sector and ii) to improve both outdoor and indoor coverage for service providers. FOC route was designed by the MFOCN’s construction planning department. Designs were completed section by section, and submitted to Myanmar’s national telecommunications authority - Post and Telecommunication Department (PTD) — and a Local Development Committee (and in some places, the municipal construction management department) for approval. Construction was carried out section by section and each section was typically between 1-3 km long. Construction of a section could take up to 3 months from early engagement of local communities to completion, involving around 250 workers over the period. Construction activities were carried out during September-May period to avoid rainy seasons whereby flooding and rains rendered construction difficult. Where an area may have posed problems (e.g. community reluctance), MFOCN had considerable technical flexibility in planning an alternative route to avoid a potential problem area. Part 1 of Phase 2 was completed in October 2017. ICBC provided a loan for Part 2 of Phase 2 (captured via Project ID#63665). Phase 1 of the project is recorded via Project ID#63327.

Additional details

1. This project is also known as Phase 2 (Part 1) of the HyalRoute Fiber Optic Cable Network Project. The Chinese project title is 缅甸光纤通信网络有限公司4500公里的光纤网络项目. 2. HyalRoute Communication Group Limited is a Singapore-based company that is owned by HyalRoute Group, a Shenzhen-headquartered telecom infrastructure company. 3. Myanmar Fiber Optic Communication Network Co., Ltd (MFOCN) was established on May 22, 2012. 4. The Multilateral Investment Guarantee Agency (MIGA) is a member of the World Bank Group. MIGA provides political risk insurance (guarantees) for projects in a broad range of sectors in developing member countries, covering all regions of the world.

Number of official sources

4

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10