US embassy cable - 04KINSHASA1763

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