The private sector affiliate of the Inter-American Development Bank (IDB) has closed a standby letter of credit (L/C), for 197.4 billion Colombian pesos (COP197.4 billion - US$47.5 million) to Colombia Móvil (Tigo), a major player in the Colombian telecommunications industry.

The L/C supports the expansion and upgrade of telecommunication infrastructure in small municipalities in Colombia.

Project scope

The project will provide mobile broadband to 915 rural areas that currently are without coverage, allowing them to enjoy the benefits of digital connectivity and contributing to close the rural-urban access gap.

It aims to help improve mobile services transition from basic 3G to 4G broadband in 340 municipalities.

Continuing L/C support

This new facility builds on an earlier standby L/C facility granted to Tigo Colombia in 2022 that guaranteed up to COP625,000 million.

Through this deal, IDB Invest said it would issue one or more standby L/Cs to eligible local banks to cover Tigo's obligations to cover guarantees issued in favour of Colombia's ministry of information and communication technologies.

The guaranteed facility, valid for ten and a half years with a tenor of up to two years for each standby L/C issued, can also be used to cover guarantees issued in favour of the single fund for information and communication technologies, a government fund to help finance small-scale telecommunications projects.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.