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IFC TO MAKE NEW INVESTMENT IN HUNGARY'S TELECOMMUNICATIONS SECTOR

WASHINGTON, D.C., June 5 -- The International Finance Corporation (IFC) has signed financing agreements for US$39 million with Westel 900 GSM Mobile Telecommunications Company Limited (Westel 900), a joint venture company established by the Hungarian Telecommunications Company (MATAV Rt.), the main telephone operator in Hungary, and U S West International B.V., a subsidiary of U S West, Inc. The project will develop a nationwide digital cellular GSM (Global System for Mobile Communications) network in Hungary to fulfill the country's high demand for cellular services. Westel 900 began operations in April 1994 and already has over 85,000 subscribers. It has been awarded a 15-year license by the Hungarian Government to provide GSM cellular services in the 900-MHz frequency band. IFC is providing a loan of US$35 million and making an equity investment of US$4 million in Westel 900. The Overseas Private Investment Corporation (OPIC) is providing a loan of US$70 million. Total project cost is estimated at US$185 m
illion. In the presence of Hungarian Prime Minister Gyula Horn at a ceremony at OPIC, Everett J. Santos, Director of IFC's Infrastructure Department said, "Hungary leads the region in the improvement and modernization of communications services, and its policies are helping to attract substantial foreign private capital for investment in the sector. This project will provide Hungarian consumers with the latest in cellular technology, facilitating communications with the rest of Europe and improving the telecommunications infrastructure needed for a market economy." IFC has had an ongoing relationship with the Westel group of companies since 1992 when IFC provided a US$15 million loan to Westel Radiotelefon Kft., which operates an analogue cellular system in Hungary serving about 60,000 subscribers. In addition to Westel Radiotelefon and Westel 900, IFC is a shareholder in MATAV Rt. and has invested in a regional telecommunications fund (Central Europe Telecom Investments, L.P.) which provides equity financing
to privately controlled telecommunications companies. IFC is a member of the World Bank Group and is the largest multilateral source of equity and loan financing for private sector projects in developing countries.