The Telecom Sector Leads Private Participation in Infrastructure

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Recent data from the World Bank’s PPP Group and PPIAF show that the telecommunications sector led private participation in infrastructure in emerging markets in 2013. At $57.3 billion, the telecoms sector barely edged out energy, with both representing 38 percent of total PPI. Although total PPI sank by 24.1 percent in 2013 compared with 2012 levels, the telecom sector fell by only 7 percent, demonstrating its relative resilience.

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Unsurprisingly, more than half of PPI telecom investment is in the mobile access segment. The top five projects in the telecom sector in every region are in mobile. The next-largest segment is multi-service providers, with 44 percent of all investments.  

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The Latin America and the Caribbean region (LAC) leads telecom PPI at $23.2 billion, with 40 percent of the total, roughly in line with its global PPI share of 46 percent. Unlike other regions, demand in the long distance segment remains. Telecom PPI in the Europe and Central Asia region (ECA) stands at $12.8 billion, or 22 percent of the total, mainly led by Russia.
 
The telecom sector has been one of the most exciting in recent years, with mobile phone and Internet technology spreading throughout the globe, even in areas with low population densities. It has brought new opportunities to the world’s poor, from mobile banking to entrepreneurship to education by text message. With the mobile segment accounting for bulk of Telecom PPI investment, this sector is likely to play an increasingly important role in economic development and poverty reduction.

(Watch this video about telecom in Haiti: "A Tool for our Times: How the Mobile Phone is Helping Haitians" http://youtu.be/t2U6m-ZWRuw)
 
In 2014, it will be interesting to watch the growth of the telecoms in Myanmar, which is successfully liberalizing the sector in one of Southeast Asia’s biggest and poorest countries. The impact of the conflict-driven economic crises in Russia and Ukraine may also have a major impact on telecom PPI in ECA.
 
Learn more about PPI in telecoms through these resources:
 
●  The PPI 2013 Telecom Brief
●  The 2013 Global PPI Update
●  The PPI database with data on over 5,000 infrastructure projects in 139 low- and middle-income countries
●  The PPP in Infrastructure Resource Center (PPIRC), with information on legal documentation for the telecom sector.
●  IFC’s page on PPPs in Information and Communications Technologies with links to specific PPP projects in the telecom sector
●  The October 2014 issue of Handshake focusing on PPPs in ICT.

 


Authors

David Lawrence

International Development Consultant

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