EMBASSY COMMENTS ON ALEXANDER'S GROUP OPIC

UNCLAS KINSHASA 001763

SIPDIS

SENSITIVE

AF/C FOR T. GALLAGHER, DEPT FOR OPIC/R.ABIZAID

E.O. 12958: N/A
TAGS: ECON EINV CG OPIC
SUBJECT: EMBASSY COMMENTS ON ALEXANDER'S GROUP OPIC
APPLICATION



1. (U) Sensitive but Unclassified. Privileged Business
Information. Please Protect Accordingly.


2. (SBU) Embassy Kinshasa has reviewed Alexander's Group
Telecom's (ASG - of NY, New York) applications for OPIC
political risk insurance. ASG has been present in the DRC
since 1999. It was previously in a joint-venture with LAM
Telecom, a small Congolese telecommunications company, to
provide international connectivity. There are still pending
debts owed to ASG from this venture and LAM with no revenue
due to its current state of inactivity likely does not have
the means to pay the debt. Regarding ASG's application for
political risk insurance, the Embassy finds no
inconsistencies that would lead us to believe that ASG should
be considered ineligible. Commercial disputes in the DRC
often take a political route to resolution, however, raising
the possibility of future political difficulties for ASG.


3. (SBU) Furthermore, commercial prospects for establishing a
new GSM network in the DRC are not promising. As noted by ASG
in its business plan, 90 percent of the telecom market of the
DRC is held by Vodacom and Celtel. Subscribers consider both
cost and network size when choosing a cellular provider.
Hence, Vodacom and Celtel which both cover over 60 cities and
villages have a competitive advantage. Small operators
currently hold less than 10 percent market share and have not
had success in expanding their networks, despite lower prices
(for example Congo-Chine Telecom).


4. (SBU) The following responds to the specific questions
listed in OPIC's standard memo for Embassy comments:

a. Post does not forsee any negative public or host
government sentiment toward the projects.

b. The projects are unlikely to have negative impacts on U.S.
policy and interests in the DRC.

c. Post has no knowledge of accusations of improprieties on
the part of ASG.

d. The project involves the construction of GSM
telecommunications towers which to the best of Post's
knowledge have no serious associated environmental effects.

e. This project would not conflict with the DRC's economic
objectives or its economic welfare.

f. Post is unaware of potential uneconomic use of raw
materials or labor.

g. As the project does not involve GDRC action beyond
licensing and taxation and does not have the GDRC as a target
market, Post does not forsee any adverse effects on the DRC's
balance of payments.

MEECE