EBRD Communications Sector Assessment Conference. Activities of the TMT Team. 29 May 2009 Tbilisi

Transcription

1 EBRD Communications Sector Assessment Conference Activities of the TMT Team 29 May 2009 Tbilisi

2 Outline I. The European Bank for Reconstruction and Development (EBRD) II. III. EBRD regional presence Telecoms, Media and Technology (TMT) Team IV. Current state of the Telecoms, Media & Technology market V. EBRD TMT Sector Strategy VI. Conclusion 2

3 I. Introducing the EBRD AAA-rated multilateral institution founded in 1991 Promotes transition to market economies in 30 countries from central Europe to central Asia The largest lender and private equity investor in the region Owned by 61 countries and two intergovernmental institutions 3

4 EBRD at a glance Capital base of 20 billion places EBRD amongst the world s largest financial institutions With capital exceeding asset base EBRD has the resources and commitment to: strongly increase investments across its sectors of operation; and continue to assist its clients changes in economic conditions notwithstanding '00 '01 '02 '03 '04 '05 '06 '07 '08 Cumulative commitments 43.2 billion Unaudited January

5 EBRD in Private sector > 77% of portfolio Debt 78%, Equity 22% of portfolio 5.1bn invested in Invested over 43.2bn in more than 2,500 projects since 1991 Debt ABV Equity ABV Net Cumulative Business Volume 5 December 2008

6 Net cumulative volume by sector Transport 13% Financial Institutions 34% General Industry 13% Power & Energy 9% Telecoms 7% Agribusiness Property & Natural 9% Tourism Resources 4% 5% MEI 6% 6 December 2008

7 Active in all countries of operations Cumulative commitments 43.2 billion Southeast Europe 21% Central Asia 7% Russia 27% Central Europe & Baltics 29% Eastern Europe & Caucasus15% 7

8 EBRD s Objectives To foster the transition of 30 countries from Central and Eastern Europe to Central Asia towards open market-oriented economies To promote transition to market economies by investing mainly in the private sector To mobilise domestic and foreign capital: multiplying effect To foster a competitive environment To stimulate and encourage the development of capital markets To encourage environmentally sound and sustainable development Focus on quality, efficiency, concrete results and return on investment (financial, economic, environmental) 8

9 In its Operations, EBRD Follows Sound Banking Principles Supports but does not replace private investors Promotes market-oriented changes in its clients and reforms in sectors or the whole economy Encourages environmentally sound and sustainable development 9

10 Offering a Wide Range of Products... Debt Project finance or corporate loans Senior debt Lender of record status for syndicated loans Subordinated debt Equity and equity-linked instruments Small equity positions as part of project financing Private equity placements Investments in equity funds A long-term partner for clients, NOT a fee-driven advisor or speculative investor 1 0

11 Funding Principles EBRD is a flexible, commercially-oriented provider of funding, which is partly or wholly unavailable from commercial banks. EBRD provides funding independently or as a lead or co-lead arranger in banking syndicates. EBRD has extensive syndication experience. EBRD funds up to 35% of total project costs for a greenfield project 35% of long-term capitalisation of an established corporate 1 1

12 EBRD Preferred Creditor Status EBRD s Preferred Creditor Status EBRD has Preferred Creditor Status in respect of transfer and convertibility risk (Art. 21 of the Agreement Establishing the EBRD) Tested in Russia, August Payments to EBRD were exempt from the transfer and convertibility moratoria 1 2

13 1 3 II. EBRD regional presence

14 A network of 36 offices in 30 countries More than half our bankers based in the region 1 4

15 Now in Turkey In October 2008 the EBRD s shareholders decided to accept Turkey as country of operations Istanbul office is in the process of being set up 1 5

16 III. Telecoms, Media and Technology Team (TMT) Visit us at: 1 6

17 Where are we at the EBRD? EBRD Banking Finance and Treasury Legal, Economics, Support Units Corporate Sector Groups Country Business Groups Telecoms, Informatics and Media Agribusiness Property and Tourism Central Europe Russia and Central Asia SE Europe and Caucasus Infrastructure Energy Financial Institutions Telecoms, Informatics and Media Team Key sector for the EBRD 7% of cumulative commitments Dedicated team of 14 bankers 1 7

18 Telecom/Media Team Portfolio Fixed line/ Integrated Telcos 41% Media/Other 24% Mobile 35% Cumulative financing to date: 2.6 billion Current portfolio: 0.7 billion Over 110 deals ranging from a few million to hundred million EURO in 29 CEE/CIS countries Projects include: Mobile telecoms operators Fixed line operators ISPs Submarine cables operators Terrestrial TV Cable TV network operators Outdoor advertising Print media Software developers Systems integrators 1 8

19 Selected Transactions: Telecoms Romania 2007 Loan syndication 50 million (total) 30 million (own account) Albania 2008 Privatisation - Loan syndication 100 million (total) 30 million (own account) Kazakhstan 2003 Loan syndication $110 million (total) $60 million (own account) Russia 2004, 2006 and 2008 Loan facilities up to EUR 420 million (total) EUR 115 million (own account) Bulgaria 2004 Privatisation-Equity, Debt and Mezz Equity: EUR 138m; Debt: EUR 196m Mezzanine: EUR 40m (totals) Equity: EUR 17m; Debt: EUR 70m Mezzanine: EUR 3.5m (own account) Georgia Bulgaria 2008 High Yield Loan $ 35million (own account) Kazakhstan 2005 and 2007 Loan syndication for KaR-Tel $130 million (total) $65 million (own account) 1 9 Albania 2003 Loan syndication 85 million (total) 35 million (own account)

20 Selected Transactions: Media Czech Republic 2002 Acquisition debt $35 million (total) $10 million (own account) Ukraine 2007 Equity 22.2 million Poland 2003 Acquisition debt 52.5 million (total) 22.5 million (own account) Regional CEE/CIS 2008 Equity 40 million Russian Federation 2003 to 2005 Loan syndication $130 million (total) $ 90 million (own account) Romania 2003 Debt Co-financing $11 million (total) $7 million (own account) Hungary 1997 Loan syndication $28 million (total) $14 million (own account) Regional CEE 2006 Loan syndication $100 million (total) $ 50 million (own account) 2 0

21 IV. Impact of financial crisis. Current state of TMT sector. Source: AP 2 1

22 2009 GDP growth, % Growth forecast 2009 reduced by 1-14 points for all countries in the region TKM 6.0 UZB 4.0 MNG AZB 2.0 ALB KYR 0.0 POL TAJ Georgia FYRoM MTN KAZ Bulgaria SER BEL CRO SVK -4.0 CZR Romania SLV -6.0 Turkey ARM LAT 2 2 EST Source: Cube database/ebrd, May Ukraine LIT Russia MOL 2008 GDP growth, % Growth in the EBRD region remained strong until Q2 2008, then the crisis hit hard.

23 Direct effects of financial crisis Economic development will regress, with most immediate impact on innovation-driven sectors. FDI to the region has been falling sharply. Private sector participation in large capital intensive projects has become more difficult. Very substantial currency devaluations. Syndicated lending and bond markets have dried up. 2 3

24 Maturing syndicated loans in 2009 Syndicated loans maturing in 2009 (US$ billion) Russian Federation 29.5 Turkey 12.3 Kazakhstan 3.3 Ukraine 2.4 Bulgaria 1.3 Romania 1.2 Georgia Source: Dealogic Loan Analytics/EBRD. February

25 Impact on TMT sector The sector is generally considered to be resilient to economic downturns and is likely to stage a recovery ahead of other sectors and the economy as a whole. Decrease in consumer s disposable income is likely to affect the MOU of mobile operators and renewal of IT durables. Corporate and Public sector IT budgets reduced to free up liquidity. Adjacent markets such as advertising have been slowing down. TMT sector, being an active user of debt finance, now experience substantial refinancing needs. 2 5

26 2 6 V. EBRD TMT Sector Strategy

27 Current opportunities in TMT Sector, EBRD as a partner EBRD clearly sees opportunities in supporting new business initiatives emerging from current economic climate focusing on efficiency and alternative energy use in TMT sector. EBRD will continue supporting TMT sector in its investment into various broadband access technologies, both wireless and wireline. The Bank expects to see potential resurgence of the strategic investor versus private equity investor in the short term, as the shift in value creation tactics away from financial restructuring and towards operational improvements clearly favours companies who know how to drive these synergies. 2 7

28 Overall transition challenges by region Central Europe South Eastern Europe Russia Central Asia Baltics Turkey Eastern Europe/Caucasus Competition Range Standards, Affordability Fixed line Overall Quality standards Regulation Convergence Implementation Independence Independence Broadband Coverage Rural Rural Rural Overall Innovation Related skills: RD Innovation Technologies Liberalisation Regional Overall fixed line 2 8 Operations Policy for Telecommunications, Media and Technology Transition Challenges

29 CENTRAL EASTERN EUROPE, BALTICS, RUSSIA SOUTH EASTERN EUROPE, TURKEY CENTRAL ASIA, EASTERN EUROPE, CAUCASUS TMT Sector Opportunities against Country Requirements CONTENT SOFTWARE SERVICES MEDIA TRANSFORMATIVE TECHNOLOGIES INFRASTRUCTURE 2 9 Operations Policy for Telecommunications, Media and Technology Transition Challenges 29

30 3 0 VI. Conclusions

31 Conclusions EBRD is the single largest long-term lender and equity investor in the CEE and CIS. Transactions are tailored to the needs of clients and a variety of financial structures can be considered. Every project has to foster economic transition, by for example enhancing competition, improving corporate governance, demonstrating new technologies or products to a country or region Despite the recession EBRD remains committed and open for business. 3 1