Digital Cable Systems loan

complete

Project Description This PSD relates to a historical Bank project approved some years ago, and does not represent a new approval, or allocation of new funds.  Disclosure of this PSD was deferred in accordance with the transparency framework in place at the time, but due to an administrative oversight, was not subsequently disclosed In February 2012, the Bank approved financing of up to EUR 15 million to Digital Cable Systems SA (DCS), a large cable TV operator in Romania, to support its expansion within the Romanian regions and modernisation of the Company’s CATV and internet networks. Project Objectives The transaction was designed to support DCS’ expansion plans in the Romanian regions and the modernisation of its existing CATV and internet networks, including specifically the acquisition of existing local CATV networks from other operators, organic growth of DCS’ CATV and internet networks through capital expenditure, and capital expenditure upgrade of DCS’ existing and acquired networks, in particular the digitalisation of analogue networks. Transition Impact The Bank anticipated transition impact from the transaction to be derived from increased competition, limiting the extent of divide between cities and urban areas.  Further, it was expected that expansion of DCS’ network capacity would assist in expansion of broadband penetration and additional geographical coverage, demonstrating successful restructure of a previously highly fragmented market. Additionality DCS’ expansion plans were dependent on the availability of long-term funding, which was otherwise not available in the market, allowing the EBRD to be highly additional in relation to the transaction. Environmental and Social Summary Identified as a Category B project, due diligence indicated that the project was unlikely to be associated with any significant environmental and social impacts and risk, that it complied with relevant laws, and had adequate environmental and social risk management, and labour management practices in place.  In order to support the transaction as a whole, DCS was required to comply with relevant Performance Requirements, and to submit annual environmental and social reporting to the EBRD. Technical Cooperation n/a - none Implementation Summary EBRD’s financing supported DCS's expansion plans in the Romanian regions and the modernisation of the DCS's CATV and internet networks. EBRD’s financing was used for (i) the acquisition of local CATV networks from other operators; (ii) the organic growth of DCS's CATV and internet networks through DCS’s expansion strategy and CAPEX plan; and (iii) the upgrade of DCS's existing and acquired networks, in particular the digitalisation of analogue networks. EBRD’s financing supported DCS’s expansion in the local telecom market; the number of DCS subscribers using double or triple services increased substantially – almost doubling within a three year period. In addition, DCS acquired more than 33 smaller operators and successfully integrated with its revenue generating units. Furthermore, with EBRD financing, DCS’s expansion contributed to increasing fixed broadband penetration rate in rural areas, acted as a positive force in the development of the local telecom sector.