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Repoft No. 1053a-SYR FILE COPYAppraisal of a Telecommunication Projectof the Syrian TelecommunicationsEstablishment (STE) SyriaApril 30, 1976
Europe, Middle East and North Africa Region
FOR OFFICIAL USE ONLY
Document of the World ank
This document has a restricted distribution and may be used by recipientsonly in the performance of their official duties. Its contents may nototherwise be disclosed without World Bank authorization.
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CURRENCY EWIVALENTS
US$1 5 13.7LS 1 ' US$0.27
FISCAL YEAR
January 1 to December 31
FMR OFMIIAL USE ONLY
LIST OF ABEREYIATINS AND ACRONYMS USED IN THE REPORT
ARAB Fund : Arab ]und for Economic and Social DevelopmentBTM : Bell Telephone Nanufacturing Co., BelgiumCarrier : A system providing a number of telephone circuits
(chanmels) through one transmission bearer (radio,- cable or open wire)
Channel : One circuit of a carrier system carrying speech orteleigraphic signals
CIT : Compagnie Industrielle des TelecommunicationsCoaxial Cable : A cable with a center conductor surrounded by a
coaxial outer conductor. It is used for high capac-ity transmission systems
DELs : Direct exchange lines (connected)EIO Platon : An electronic telephone switching system developed
in FranceEND : EDELMETALL MOTOR DREHWAEHLER, an automatic telephone
switching system utilizing a motor driven rotaryswitch
Expressed Demand : Sum of working connections and waiting listGHZ : Gigahertz (1,000 megahertz)INTELSAT : International Telecommunication Satellite ConsortiumITU : International Telecommunication UnionKM : Kilometer (1 kilometer = 0.62 mile)MHz : MegahertzMicrowave : Radio system working at frequencies above 300 MHz but
normally applied to systems working at frequenciesabove 1,000 MHz
Morse System : A telegraph system using the Morse codeMultiplex : E4uipment in a carrier system which shifts and stacks
the different circuits in the frequency spectrumappropriate to the particular carrier system
NEC : Nippon Electric CompanyPTE : Posts and Telecommunications EstablishmentPTT : Posts, Telegraphs and TelephonesRotary TD : A type of centrally motor driven rotary telephone
switching systemSTD : Subscriber trunk dialingSTE : Syrian Telecommunication EstablishmentTelephone Availability: Working connections divided by the expressed demandTelex : Teleprinter exchange systemToll Ticketing : Method of charging long distance calls by recording
particulars of each call made applying relevant tarifftHF : Ultra high frequency radio systems (300-3,000 MHz)UNDP : United Nations Development Program
This document has a restricted distribution and may be used by recipients only in the performanceof their omcial duties. Its contents may not otherwise be disclosed without World Bank authorizaon.
SYRIA
SYRIAN TELECOMMUNICATIONS ESTABLISHMENT (STE)
APPRAISAL OF A TELECONMUNICATIONS PROJECT
TABLE OF CONTENTSPage No.
SUMMARY AND CONCUJSIONS i - ii
1. INTRODUCTION 1
2. THE SECTOR 1
Background 1Access to Telephone Services 2Users of Telephone Services 3Quality of Telephone Service 3Sector Objectives 4Investment Plan 5Sector Constraints 6
3. THE PROGRAM AND THE PROJECT 6
The Plan 6The Program 7The Project 7Cost Estimates 8Contingencies 8Financing of Project 9Items for Bank Financing 9Procurement 9Execution of the Project 10Disbursements 10
4. JUSTIFICATION 10
Local Telephone Service 10Telephone Service in Rural Areas 11Long Distance Telephone Service 11Telex Service 12Least Cost Solution 12Return on Investment 13
5. THE BORROWER 13
Organization and Management 13Staff and Training 14Accounting and Audit 1
This report is based on information provided by STE and on the findings ofa mission composed of Messrs. S. A. Sathar, H. Hillebrenner and Y. Kubowhich visited Syria in October/Novernber 1975.
5. THE BORROWER (Continued) Page No.
Insurance 15Payments to Government 16Tariffs 16
6. FINANCES 17
Background 17Past Financial Performance 17Present Financial Position 18Financing Plan 19Future Finances 20
7. AGREEMENTS REACHED AND REOOMMENDATION 22
List of Annexes
1. Basic Data2. Existing Facilities3. International Telephone Statistics4. Distribution of Telephones in Urban and Rural Areas5. Growth of Local Telephone Network5a. Growth of Local Telephone Network (Chart WB-15521)6. Access to Telephones for Villages7. Size of Villages without Telephones by 1970 Population8. Telephone Subscribers by Category (for Small Exchanges)9. Telephone Subscribers at Residential Locations (for Small Exchanges)10. Analysis of Domestic Manual Long Distance Calls11. Growth of Telephone Traffic12. Telecommunications Plan Investment (1976-80)13. Description of Works in the Five-Year Plan (1976-80)14. Local Automatic Telephone Exchange Installation Program (1976-80)15. Telex Exchange Installation Program (1976-80)16. Automatic Trunk Exchange Installation Program (1976-80)17. 200,000 Lines Special Project Installations18. Project Construction Costs19. Contingency Provision in Project Cost Estimates20. Estimated Schedule of Disbursements21. Internal Financial Rate of Return22. Organization Chart (Chart WB-15522)23. Estimates of Staff Requirements24. Summary of Basic Tariffs25. Income Statements26. Notes and Assumptions on Financial Statements27. Balance Sheets28. Sources and Applications of Funds29. Performance Indicators
MAP Map of Long Distance Network (IBRD - 12015R)
SYRIA
SYRIAN TELECOMMUNICATIONS ESTABLISHKENT (STE)
APPRAISAL OF A TELECOMMUNICATIONS PROJECT
SUMMARY AND CONCLUSIONS
i. This report covers the appraisal of the First TelecommrunicationsProject in Syria, for which a Bank loan of US$28.0 million is proposed.The Borrower and the Beneficiary would be the Syrian TelecommunicationsEstablishment (STE), which has responsibility for public telecommunicationservices in the country.
ii. Telephone services in Syria are inadequate in both extent andquality. Failure to meet the demand has resulted in a waiting list largerthan the total number of connected lines (DELs), with applicants usuallyhaving to wait several years for a connection. The quality of localtelephone service is poor, mainly due to overloading in some of the tele-phone exchanges; there is inordinate delay on long distance telephone callsbetween most centers. This inadequacy of the telephone services has had anadverse effect on all sectors of the widely dispersed Syrian economy, whichcannot develop with maximum efficiency without adequate telecommunicationfacilities.
iii. Government has set specific targets for STE to overcome thesedeficiencies during the fourth plan period (1976-80) by improving andexpanding STE's facilities. Specifically, 300,000 additional telephoneconnections are to be provided in urban areas together with 20,000 addi-tional telephones in rural areas and extension of service to 800 villages.Improvement of the long distance service is planned with the provision oflarge-capacity transmission systems between all main centers and develop-ment of the subscriber trunk dialing (STD) network. International servicesare to be improved by installing an earth station near Damascus and submarinecables in the Mediterranean Sea.
iv. The plan incorporates (a) the carrying forward of unfinished worksfrom the third plan period (1971-75), (b) new works within the executioncapability of STE in the fourth plan period, and (c) a special projoct forthe installation of 200,000 lines which will be executed with specialassistance from the equipment suppliers. The cost of the plan is estimatedat about LS 1,234.8 (US$333.7) million, with a foreign exchange componentof LS 805.6 (US$217.7) million. The project, consisting of the most urgentworks included in the first three years (1976-78) of the plan, forms abalanced and integrated package. The estimated cost of the project isIS 538.8 (US$145.6) mlllion, with a foreign exchange component of LS 348.8(US$9h.3) million.
v. During the 1976-78 period the project would provide about 87,000additional telephone connections', relieving somewhat the outstanding demand
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and connecting about 540 villages to the network. The local telephonenetwork would also be rehabilitated and traffic capacity expanded, leadingto improvement in the quality of service. With completion of the longdistance Damascus-Aleppo-Palmyra coaxial cable systems and the Homs-Raqqa-Hassake microwave systems, an adequate number of circuits will becomeavailable between the main centers. The installation of spur routes willprovide secondary centers with more reliable communications. Thesetogether with expansion of subscriber trunk dialing (STD) facilities, willimprove the quality and availability of the long distance services andstimulate additional demand. The international telephone and telex serviceswill be considerably improved with completion of the earth station.
vi. Of the US$94.3 million total foreign exchange cost of the project,about US$28.7 million has been secured under suppliers' credits and bilateralloans. The proposed Bank loan would provide US$28.0 million, leaving abalance of US$37.6 million to be financed by STE and Government. The projectwould be executed by STE with some assistance from the equipment suppliers.The arrangements within STE for supervision of project execution and instal-lations are satisfactory.
vii. All procurement under the proposed Bank loan would be subject tointernational competitive bidding in accordance with the Bank's Guidelinesfor Procurement.
viii. STE is governed by Syrian Law No. 18 of 1974, which provides foradequate day-to-day autonomy in its operations. STE's organization is nowbeing restructured following separation of the postal and telecommunicationsoperations. STE's management is satisfactory. STE plans to develop itsmanpower, recruitment and training program to ensure effective coordination ofexecution of its special project and operation of the facilities in additionto the normal expansion program.
ix. STE's operating results have been satisfactory and its financialposition is sound. However, in order to carry out the large expansion pro-gram, STE will have to considerably increase its internal cash generationand take up substantial borrowings. For this purpose, STE proposes toraise tariffs, which are low, providing for an increase in telephone reve-nues of about 40%. In addition to the funds available from internal cashgeneration, suppliers' credits, bilateral loans and the proposed Bank loan,Government will have to provide substantial funds to meet requirementsduring the 1976-78 period. On the basis of the proposed tariff increaseand Government's financial assistance, STE would continue to be finan-cially viable. The internal rate of return of the project is estimatedat 20.6%.
x. The proposed project forms a suitable basis for a Bank loan ofUS$28.0 million equivalent to STE for a term of 20 years, including afour-year grace period.
1. INTRODUCTION
1.01 The Government of Syria has requested Bank assistance in financingtelecommunications development for the fourth plan period (1976-80) to beundertaken by the Syrian Telecoimmiications Establishment (STE). The planis designed to improve and expand the telecommunication services by meetingmost of the outstanding and anticijpated demand by 1980 for local telephoneservice as well as providing fast arid reliable long distance services,both domestic and international, along with substantial expansion of thetelex service.
1.02 The project constitutes the most urgent works in the first phaseof the plan during the 1976-78 period and is estimated to cost aboutLS 5.38.8 (US$145.6) million, with a foreign exchange component of LS 348.8(US$ 94.3) million, of which US$28.0 million would be financed by the Bankloan. About US$28.7 million has been secured under suppliers' credits andbilateral loans, and the balance Vill be financed by STE and Government.
1.03 STE would be the Borrower and Beneficiary.
1.04 This would be the first B3ank Group operation in the telecomoni-cations sector in Syria.
1.05 This report is based on information provided by STE and on thefindings of a mission composed of M{essrs. S. Sathar, H. Hillebrenner andY. Kubo which visited Syria in October/November 1975.
2. THE SECTOR
B,ackcground.
2.01 Syria's public telecomnmuication facilities are State-owned.Prior to 1975 the Posts and Telecommunications Establishment (PTE),attached to the Ministry of Communications, was responsible for postal andtelecommunication services. With effect from July 1975, a new public entityentitled the Syrian TelecommunicatLons Establishaent (STE), governed byLaw No. 18 of 1974, has been creatsd and made responsible for the develop-ment and operation of the domestic and international telephone, telegraphand telex services in the country. Basic data on existing facilities aregiven in Annex 1, and a description of these facilities is at Annex 2.
2.02 Syria's widely dispersed and rapidly growing economic activitiescreate a need for satisfactory country-wide communications. The largestsingle sector is agriculture, provlding employment for 51% of the laborforce and accounting for 22% of GD]P and about 30% of total export earningsin 1 4. Agricultural production is spread throughout the country(185,000 km2 in area) with the major concentration in the coastal,northernand northeastern regions along the band of heavy rainfall. Other majorsectors of the economy are industry and commerce. The extractive industry(mainly oil and phosphates) is another major source of export earnings,accounting for about 55% of total iexports in 1974. Most of the oil
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p:roduction is in the northeastern part of the country. Manufacturing andcommercial activities are concentrated in Damascus, Aleppo and other prin-cipal cities which are widely separated. The main ports (Latakia, Tartousand Banias) are located far from the production and consumption centers.
2.03 Following the reorientation of Syria's economic policy in 1970,the average annual growth of real GDP during the 1970-7 4 period was 10%as compared with 4.5% during 1964-70. Reflecting this high rate of economicgrowth, demand for telecommmnication services has been growing rapidly inthe various sectors of the economy, especially in commerce, industry andagriculture, with Government and professionals (doctors, lawyers,etc.)adding to the demand. Good telecommunication services are essential forSyria's coordinated economic development, facilitating comercial trans-actions, procurement of supplies, and transport and marketing of products.But the existing telecommunication facilities do not provide fast andefficient services, and STE has been unable to meet the growing demand. Thissituation constitutes a major bottleneck to economic development in both theurban and rural areas; hence, Government has placed a heavy emphasis onimproved telecommunications, as evidenced by the specific targets set fortelecommunications development in the fourth five-year plan (para. 2.09).
Access to Telephone Services
2.0L Syria's telephone density of 2.14 per 100 population as of January1975, compared with that of other Mideastern countries, is relatively higherthan some (Iraq - 1.42; Algeria - 1.38; Egypt - 1.37) but lower than others(Iran - 2.40; Turkey - 2.30) (see Annex 3). Major telecommunications develop-ment programs are being undertaken in most of these countries, however, anddlespite its development program Syria will maintain a lower growth rate overthe next two to three years than that planned iniqeighboring Turkey and Iran.The telephone densities in urban and rural areas are given in Annex 4;they reveal a low density of 0.20 per 100 population in the rural areas.
2.o5 Telephone availability2/in Syria had been fairly stable at about60)% during 1964-70; but due to the rapid increase in demand and the inade-qLuate supply of telephone connections since 1970, the rate had fallen toless than 50% by 1974 (Annex 5). There is also a general shortage of public
I/ According to STE's classification, adopted in this report, "urban"areas include all the provincial capitals and communities with morethan 20,000 population. The rest of the country is defined as "rural"areas, with each community in these areas referred to as a "village".
-- Telephone availability is defined as the working connections dividedby the sum of working connections and waiting list.
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telephones in both urban and rural areas. Telephone availability by prin-cipal areas as of December 31, 1'374, was as follows:
Wlorking Waiting TelephoneConnections List Availability
Damascus 49,504 55,063 47%Other urban areas 59,616 61,271 49%Rural areas 7,467 5,546 57%
Total 116,587 121,880 48.9%
2.06 The availability indicated for rural areas underestimates truedemand because waiting lists are not prepared in areas which have nofacilities. Access to telephone service in the rural areas is very low,with a large majority of the villages having no access. The table atAnnex 6 shows that of the villages with more than 1,000 population, only29% have serrice; Annex 7 shows -that of the remaining 71% without service,comprising 670 villages, 566 have a population of more than 700 and 104have more than 2,000 population.
Users of Telephone Services
2.07 STE does not maintain telephone statistics by type of use, buta survey of 18 small exchanges in the vicinity of provincial capitals showsthat 55% of the telephones are installed at business premises (Annex 8);moreover, a large majority (about 70%) of the telephones at residentiallocations is being used for productive purposes (Annex 9). Overall, about86% of the telephones surveyed are considered to be business telephones,including those used by Government and its agencies. For larger exchangeareas, sample surveys have indicated telephones at definitely identifiablebusiness locations as 46.5% in Daraa and Y4.0% in Damascus. As in the caseof small exchange areas, most of the telephones at residential locationsare used for productive purposes. A telephone revenue analysis in Damascusalso indicated extensive use for business purposes.
Quality of Telephone Service
2.08 The quality of local telephone service is poor. Subscriberscannot establish connections during peak hours because of congestion insome of the exchanges. The number of subscriber complaints is very high inDamascus, and the time required to clear faults is long. The presentlong distance service is likewise inadequate. Subscriber trunk dialing(STD) facilities between Damascus, Homs, Hama, Daraa and Zabdani are quitesatisfactory. STD service betweien Aleppo and Latakia, Raqqa, Deir-ez-Zorand Hassake is not satisfactory due to a lack of good quality and adequatenumber of circuits. Over the mainually operated circuits, waiting time forconnection between major cities is long, with delays of several hours andpoor quality of transmission. T'his has hampered effective use of theservice and reduced its revenue potential. As shown in Annex 10, about25% of calls are unsuccessful. Trunk line faults and poor connections arealso high, accounting in some cases for up to 21% of failures. Despite the
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poor quality of service, the average growth in domestic traffic during the1971-74 period has been about 17% and in international traffic about 14%(Annex 11).
Sector ObJectives
2.059 STEts fourth five-year plan for telecommunications development hasthe main objectives of (a) improving telecommunication services to existingsubscribers in the country, and (b) providing access to a substantial numberof new subscribers and areas 'which need these services. The local telephoneservice will be improved by the introduction of more modern equipment and anincrease in traffic capacity. The availability and quality of the domesticand international long distance services will be improved by the replacementof obsolete equipment and the installation of additional systems and circuits.The plan will provide for (a) 300,000 additional automatic telephone connec-tions in urban areas, (b) 20,000 additional manual telephone connections inrural areas, (c) access to the telephone system for about 800 villagespresently without telephone facilities, (d) expansion of the long distancefacilities, (e) expansion of the international facilities, and (f) estab-lisiment of a new telecommunications training center in Damascus.
2.10 By end of 1980 with the planned expansion of the local facilities,the network should be able to satisfy most of the projected demand for tele-phone connections in the country. The telephone availability rate willincrease to about 86% in urban areas and 100% in rural areas, compared withthe 1974 level of about 48% in urban and 57% in rural areas. The number ofvillages with telephone-facilities will increase from 360 in 1974 to 1,160in 1980, and about 60% of the rural population will have access to thetelephone system, compared with about 25% in 1974 (paras. 2.06, 4.05).
2.11 Expected changes in some parameters, reflecting the availabilityof telephone service between 1974, 1978 and 1980, are shown below.
Telephones per 100 Population 1974 1978 1980
Syria 2.14 3.47 6.00Damascus 6.69 10.50 15.95Other urban areas 3.08 5.95 11.63Rural areas 0.20 0.47 0.62
Telephone Availability
Syria 48.9 58.3 87.20Damascus 47.3 53.9 71.40Other urban areas 48.4 57.7 98.20Rural areas 57.4 99.5 100.00
Unsatisfied Demand
Syria 121,880 157,110 58,93hDamascus 55,063 76,147 57,985Other urban areas 61,271 80,853 4,208Rural areas 5,546 110 -
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After completion of the project in 1978, telephone densities and avail-ability would improve significantly throughout the country but the unsatis-fied demand would not be fully met; however, it would be reduced to areasonable level by 1980 at the end of the plan period. The extent andquality of the local and long distance services would also be considerablyimproved with completion of the project.
Investment Plan
2.12 PTE's investments during the third five year (1971-75) planperiod was about LS 130 (US$35) million and was dependent for financingentirely upon PTE's own resources and minor suppliers' credits. The programwas inadequate to meet the existing demand. This, added to the rapid increase ineconomic activity since 1971 resulted in a heavy backlog of demand needinga very substantial increase in investment to provide some measure of relief.During 1975 the last year of the third plan, Government extended financialsupport to enable PTE to undertake a telephone expansion of 100,000 lines andalso establish an earth satellite station to improve the internationaltelecommunication service. Goverment also separated the telecommimicationservice from PTE by creating STE and gave directions to the newly formedentity to develop the fourth five year plan with a view to meet all thepending and expected demand during the plan period and substantially improvethe service to bring it to a satisfactory level.
2.13 To implement the sector objectives during the fourth five-year planperiod (FY1976-80), STE has provided for a total plan investment of aboutUS$333.7 million, with a foreign exchange component of about US$217.7million. The planned investment would result in a more than fivefoldincrease in assets. The distribution of investment between local telephone,telegraph and long distance domestic and international networks is as follows:
Total Cost Percentage(US$ illion) of Total
Local telephone networks:
(a) ongoing expansion 66.8 20.0(b) special project 102.7 30.8
Telegraph networks 8.8 2.6Domestic long distance networks 63.8 19.1International long distance network 74.7 22.4Rural networks 9.3 2.8Teleoommunications training 2.1 0.6Miscellaneous 5.5 1.7
Total ID-7 100%
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Sector Constraints
2.14 Until 1974, telecommunications development was financed from STE'sown resources and through minor suppliers's credits. The debt/equity ratiowas very low - 3/97. In order to make reasonable contributions to the 1976-78financing plan, STE will need to considerably increase its internal cashgeneration and take ulD substantial borrowings. STEts present tariffs havenot changed since 1972 and are low. STE has therefore proposed to Govern-ment to revise tariffs which will increase STE's telephone revenues by about40%. Government is expected to approve these proposals, which in the19715-78 period should provide for contributions by internal generation ofabolut 27% of requirements. Borrowings, including the proposed Bank loan,wouLd account for about 55% and Government will contribute 18%.
2.15 One of the main constraints to development of this sector, assumingthat financing is secured for all the works in the five-year plan, is thelim:Lted availability of skilled manpower. While the expansion of the tele-commwnications training center provided for in the program will help tocorrect this, STE needs to give special attention to the recruitment andtraining of a substantial number of additional staff required for executionof the large expansion program and operation of the facilities. STE duringnegotiations provided an acceptable outline of a plan and agreed to developthe program of manpower recruitment and training for review by the Bank.(para. 5.06).
2.16 Although STE's new status as a public establishment provides foradeqlaate day-to-day autonomy in operations, its organization needs to beimproved with respect to planning and coordination of execution of Drojects.STE therefore intends to streamline its organization with respect to the above aswell as in the operations, accounting and financial areas. STE has agreed duringnegoltiations to forward to the Bank for comments the details of its organizationat headquarters and regions which is presently under review (para. 5.o2).
3. THE PROGRAM AND PROJECT
The Plan
3.01 The Government of Syria has approved a telecommunications develop-ment plan for the period 1976-80 which forms part of Syria's fourth five-yearplan. The proposed total outlay for the plan during 1976-80 (including thespecial project) is about LS 1,234.8 (US$333.7) million, with a foreignexcbhange component of LS 805.6 (US$217.7) million. The plan includes (a)the ongoing works of the third plan period, (b) new works in the fourth planperiod, and (c) a special project for the installation of 200,000 lines oflocal telephone exchange equipment, associated buildings and cable net-works, installation of 'which is beyond STE's normal execution capabilityand therefore would be executed with special assistance from equipmentsuppliers. The arrangements for the phasing and execution of the specialproject are under discussion with interested suppliers and bilateral govern-ment aid agencies. The details of the plan and investments, including thespecial project, are given in Annexes 12 and 13.
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The Program
3.02 STE's telecommunications investment for the first three years,1976-78 -- the first phase of the fourth plan period (1976-80) -- con-Btitutes the program. The program comprises (a) works in the Bank assiatedproject, (b) other works in STE's program, and (c) commencement of the worksincluded in the special project. The total investment for this program iJestimated at about LS 731.5 (US$197.7) million, with a foreign exchangecomponent of LS 489.0 (US$132.2) million. Details are in Annex 12.
The Project
3.03 The project oonsists of the following most urgent works in thisprogram during 1976-78 and constitutes a balanced and integrated package:
(a) installation of about 75,000 automatic telephone con-nections;
(b) installation of abaut 12,000 mnual telephone connections;
(c) provision of telephone access to about 540 villages;
(d) expansion of long distance telecomunications facilitieswith the
(i) installation of the Damascus-Aleppo-Latakia-Palymyra coaxial cable systm and the Homs-Raqqa-Deir-ez-Zor-.Hassake microwave system,
(ii) replacement of the obsolete Damascus-Aleppo-Latakia-Raqqa microwave system, and
(iii) installation of microwave/UHF system on spurroutes comprising Dmascus-Tanf, Rons-Palmyra viaIhenefis, HEos-Tartous, Hma-Banias, Tartous-Latakia, Jable-lerdaha, Latakia-Kessa, Aleppo-Djerablous, Raqqa-Tall Abiad, Hassake-Ras al Ain,Hassake-Qamishliye, and Deir-ez-Zor-Abou Kemal;
(e) cmpletion of installation of autmatic trunk exchanges with2,800 lines;
(f) instalLation of about 300 teleprinters for the telegraph andtelex services;
(g) expansion of the international facilities with installationof an earth station working via the Indian Ocean satellite;
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(h) provision of an international telephone switching centerfor about 800 lines; and
(i) establishment of a new telecommunications training centerin Damascus.
The items proposed for Bank financing (para. 3.08) are mainly concerned withthe works in (a) through (d) above.
Cost Estimates
3.014 The total cost of the project is estimated at about IS 538.8(US$145.6) million, with a foreign exchange component of IS 348.8 (Us$94.3)million. The cost details are given in Annex 18 and summarized below:
Syrian LS Mllion US$ MillionI Local Foreign Total
Telephone exchangeequipment 36.00 117.00 153.00 9.73 31.62 41.35
Subscriber sets 6.oo - 6.oo 1.62 - 1.62Cab:Le networks 37.00 52.00 89.00 10.00 14.05 24.05BuIldings for exchanges l.0oo 2.00 13.00 2.97 0.54 3.51NatLonal long distancenetworks 23.70 57.77 81.47 6.40 15.61 22.01
Replacement of northernicLrowave networks 5.00 10.00 15.00 1.35 2.70 4.05
Spinr microwave/UHFnetworks 13.52 17.76 31.28 3.65 4.80 8.45
Intesrnational networks 6.50 21.10 27.60 1.76 5.70 7.46Telegraph networks 3.30 12.70 16.00 0.89 3.43 4.32Rural networks 18.48 15.91 34.39 4.99 4.30 9.29TelecomimunicationsTraining Center 4.10 3.00 7.10 1.11 0.81 1.92
Contingencies 25.37 39.63 65.00 6.85 10.71 17.56
Total Cost 189.97 348.87 538.84 51.32 94.27 145.59
3.05 The project cost estimates are based on STE's recent experience,adJulsted to end of 1975 price levels. For a major part of the telephoneexchange equipment and some of the long distance networks not financed bythe Bank loan, actual contract prices have been used. The local costs, inaddition to civil works, include (a) salaries of STE's personnel used toconstruct cable networks and to help install exchanges and subscriber lines,and (b) import duties of from 22% to 35% which STE is required to pay toGovernment.
Contingencies
3.065 In the case of a substantial part of the telephone exchange equip-men-t and the national long distance and international networks, firm
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contracts have been placed. Contingencies have been estimated on the otheritems. A physical contingency of 4% has been provided in the foreign andlocal costs of such items as bu:LLdings and equipment; this would be suffi-cient to cover unforeseen changes in requirements which might occur whenthe detailed specifications are drawn up. In the case of cable networksand rural networks, no physical contingency is provided as the dispersionof these networks throughout the country permits flexibility and adjustnentto keep overalL costs within the estimates. The price contingencies arebased on increases of (a) 10% in 1976 and 8% in 1977 and thereafter incosts of equipment, and (b) 20% in 1976 and 16% in 1977 and thereafter inlocal costs of labor and civil works. These are considered adequate. Theresulting estimated overall price increases amount to about 1L.9%.of thebase cost estimates plus physical contingencies. Details of the contingencyprovision are given in Annex 19
Financing of Project
3.07 Of the UST 94.3 million of total foreign exchange cost of theproject, about US$28.7 million has been secured under suppliers' creditsand bilateral loans. The proposed Bank loan would provide US$28.0 million,leaving a balance of US$37.6 miLlion to be financed by STE and Government.The local cost of US$51.3 million of the project would be financed by STE.
Items for Bank Financing
3.08 The items proposed for Bank financing are:
US$ Million
(a) Cables and accessories for telephonenetwork expansion 13.5
(b) Microwave equipment and accessories forthe Damascus-Aleppo-LItakia-Raqqa systems 2.7
(c) Microwave/UHF, multipLex equipment andaccessories for twelve spur routes 4.8
(d) Rural network materials consisting mainly of poles,wires, carrier equipment and accessories 4.3
(e) Unallocated 2.7
Total 28.0
Procurement
3.09 All equipment and materials financed by the Bank loan would besubject to international competitive bidding in accordance with the Bank'sGuidelines for Procurement. A :15% preference or the prevailing customsduty whichever is lower will be applied to bids from local manufacturersin respect of rural network materials under international competitive bidding.
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For items in the proJect not financed by the Bank loan, STE has alreadycontracted for a major part of the telephone exchange and long distanceequipment at reasonable prices. For the rest of the equipment and materials,STE intends to call for bids or to negotiate in accordance with its pro-curement regulations.
Ikecution of the Project
3.10 STE would prepare the specifications and bidding documents for thecable networks, microwave/UHF radio equipment and rural network materials.The supplier would install and commission the microwave/UHF equipment. STEwould lay and joint the cables and install the subscriber facilities. Inthe case of the telephone switching equipment not financed by the Bank, thesuppliers would supervise installation by STE's personnel. The civil works,buildings, access roads and major duct routes to be financed by STE would becarried out by local contractors under STE's supervision. STE's Director ofProjects would monitor the execution of the Bank-financed project and thesearrangements are satisfactory.
Disbursements
3.11 The proposed loan would be disbursed against the foreign cost ofimported equipment, materials and installation costs and 100% of ex-factorycost, excluding sales or similar taxes for materials supplied by local manu-facturers (para. 3.09). The estimated schedule of disbursements is atAnnex 20. To allow sufficient time for final invoices, a closing date ofJune 30, 1979, is proposed. As the project is part of a continuing develop-menit program for the telecommunications sector, it is proposed that anyunused balance be applied, after consultation with the Bank and under thesame terms and conditions, against the costs of goods and services similarto those financed by the Bank loan.
4. JUSTI FI CATION
14.0 While the justification deals primarily with the project, whichcomprises the most urgent works in the first phase (1976-78) of STE'sfive-year development plan, STE's overall plan objectives and targets asrelated to the demand for the various services are also dealt with in thischapter.
Local Telephone Service
4.02 The past and expected growth of the local telephone systems isshown in Annexes 5 and 5a. The expressed demand (working connections pluswaiting list) has been growing since 1970 at an average anmual rate of15.9%, while actual connections have been growing at the slower rate of10% per year; therefore, the waiting list grew at 23.6% during the 1970-74period. As of December 31, 1974, Syria had 116,587 DELs and a waiting listof 121,880. The total demand has been forecast over the 1975-80 period onthe basis of an average annual growth rate of about 11% (compared with15.9% average growth since 1970) and is expected to be about 1461,800 by
3-11
December 1980. Even so, the plan will not meet the total demand, as explainedbelow.
4.03 The project provides for the installation of about 87,000 DELs, sothat by the end of the project iperiod, in 1978, the telephone availabilitywould have increased frm about 49% to 58%. STE's development plan, includingthe special project, provides for the addition of 270,500 DELs during thefive-year plan period (1976-80), with the special project providing most ofthese additions in the last two years. By end of 1980, about 87% of thedemand would have been net and the vaiting list would be reduced to about59,000.
4 04 A study of STE's waiting list related to the new connections madeduring the fourth quarter of 19'74 revealed that the average waiting time foreach connection was about 6.8 years for Damascus City and 7.6 years forAleppo. About 9,750 applicants (17.7% of the waiting list) in Damascus Cityand 6,910 (31%) in Aleppo had been waiting for more than nine years. In thesmaller exchange areas the average waiting time for a connection is generallyshorter. However, there is considerable unrecorded demand and pressure forexpansion into new exchange areas. STE's development plan will improve theposition on waiting time for neiw connections at the end of the project periodin 1978, but only by the end of the plan period in 1980 will the waiting timebe reduced to less than two years of application.
TlePhone Service in Rural Areas
4..05 The low rural telephone density Of 0.20 per 100 population (para. 2.04)highlights the need for developmrent in the rural areas, especially in view ofthe importance of agriculture to the Syrian economy. During the project period(1976-78) STE expects to connect about 540 villages presently without telephonefacilities and about 12,000 addi.tional marnal subscribers in the rural areas.This will satisfy the expressed demand in the rural areas. At the end of theplan period in 1980, with th, total addition of 800 villages with access, thenetwork will cover moBt of the relatively larger villages not previously servedby the telephone system (para. 2.10).
Long Distance Telephone Service
4.06 Major improvements in speed of connection and quality of longdistance calls would be brought about by the provision in the project forexpansion of the long distance facilities through completion of (a) theDamascus-Aleppo-Latakia-Pa2myra coaxial cable systems, (b) the Homs-Raqqa-Deir-ez-Zor microwave systms, (c) the twelve spur UAcrowave/UHF routesin the coasta4 northern and eastern regions, and (d) bhe installation ofautomatic trunk excbanges with terminations for 2,800 circuits. Theimprovement and expansion of the network with STD service is expected toresult in a growth of 20-25% per year with stimulation of traffic of 50% onthe STD routes. The transmissicn system has been designed to meet expectedtraffic increases over the life of the systums and will be equipped to meet
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the nornal requirements over the next few years. Additional multiplexequipment can be added, as required, to meet later traffic increases. Theinstallation of the earth station and the international telephone switchingcenter will immensely improve the quality and speed of international tele-phoane service.
4.07 In addition to the facilities in the project, STE's five-year planprovides for the installation of submarine cable connections to Crete andAlexandria and further expansion of the satellite conmmication system andthe, national and international trunk exchanges. These additional works, tobe executed in the second phase of the plan period (1979-80), are designedto meet the increased traffic resulting from execution of the special projectof 200,000 lines. They will also provide alternative routings in some ofthe most imp6rtant sections.
Te2ex Service
4.C8 This service was first provided in Damascus in 1969 with a manualexchange of 30 lines and was replaced in 1974 with an automatic exchangewhich has a capacity of 250 lines. During 1976, new telex exchanges will bebrought into service in Aleppo, Homs and other main centers (Annex 15),bringing the total to about 1,100 lines in the country. These exchanges areexpected to meet the demand through 1978. STE has planned a further expansionof about 1,800 lines to meet requirements by the end of the plan period. Atpresent the telex service is used primarily for the international trafficfrom Damascus, but with the extension of the service to other centers thedomestic traffic will become significant. The proposals are based on anannual subscriber growth of 40% and an international traffic growth of 35%.This is in line with experience elsewhere.
Least Cost Solution
4.09 Fundamental decisions determining Syria's telecommunicationsstructure were taken in 1970 in connection with the introduction of sub-scriber trunk dialing (STD). These incorporated numbering, switching andtransmission plans which are satisfactory. The facilities to be providedunder the project reflect a continuation of these policy decisions. The size,design and timing of the additions to the telephone switching facilitiesincluded in the project represent the least cost solution. The size andtixing of the extension of the associated cable distribution network are basedon general plant practices for achieving least cost.
4.10 In the long distance sector, replacement of the microwave equipmentfor the Damascus-Aleppo-Latakia-Raqqa route is necessary as it is obsoleteand has exceeded its useful life. In providing the replacement system, STEwiLl achieve the least cost solution by using existing sites, buildings andtowi3rs as well as common equipment. For other domestic long distance routesin the project, coaxial cable was chosen for the Damascus-Aleppo-Latakia-Palbyra route to provide increased capacity and to serve intermediate points.For the Hons-Raqqa-Deir-ez-Zor-Hassake-route, microwave was correctlychosen over coaxial cable as the least cost solution. For the twelve spur
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routes in the coastal, northern and eastern regions, STE has agreed duringnegotiations to submit to the Bank for review the alternatives of UHF ormicrowave systems for the various links to determine the least cost solution.
Return on Investment
4.11 The internal return on the project, defined as the discount ratewhich equalizes the stream of expected revenues (including effects of tariffincrease) pertaining to the project with the attributable capital andoperating cost (excluding taxes, duties and contingencies), is 20.6% (Annex 21).This rate of return is satisfactory. A sensitivity analysis shows that underthe most unfavorable combination of main parameters -- 10% increase in capitaland operating cost and 10% decriease in revenues -- the rate of return would benot less than 14.7%. The rates of return suggest that on average the price thatthe telephone subscribers are required to pay for service is considerably inexcess of the long-run marginal costs.
4.12 The economic return is undoubtedly higher because (a) the pricescharged do not adequately measure the full benefits to the subscribers,primarily business, industry and agriculture; (b) there are external benefitswhich accrue to parties other tfhan those who pay directly for the use of thefacilities; and (c) the costs include the full cost of extending service tonew areas and providing high-capacity systems even though the full benefitswill be obtained in the future when additional lines or circuits are connected.
5. THE BORROWER
Organization and Management
5.01 By Decree No. 1935 dated July 10, 1975, the Posts and Telecommuni-cations Establishment (PTE) was dissolved and STE created as a separatepublic establishment. STE is governed by Law No. 18, which provides it withday-to-day autonomy in operations and enables it to function as a commercialentity. However, Government will continue to approve tariffs and investments,as well as provide major financial support, and has to be consulted on allimportant matters of policy. STE is governed by a Board, with its chiefexecutive designated as Director General. He is appointed by PresidentialDecree. The Board is composed of the Director General as Chairman and fiveheads of STE's departments and a representative of the workers as members.The Board members are appointed by the Minister of Communications. TheBoard is empowered to set policies and regulations and to propose tariffs.STE's annual development plan and annual operating budget need approval bythe Board and the Minister of Communications. The accounts of STE requireacceptance by a special Board meeting which is the equivalent of a generalshareholders' meeting, with representatives from the Central Board ofControl and Inspection and the Central Board of Financial Control partici-pating.
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5.02 #While STE has existed as an independent entity since July 1975,the telecommunication service was a well established branch of the PTEestablishment for many years. The Director General of STE is a highly capablemanager and experienced telecommunication engineer. STE's technical andmanagement staff are competent and have been serving in the organization forlong periods. Some improvements in organization particularly in coordinationof execution of the special project is required with the heavy expansionprogram. STE's present organizational structure is shown in Annex 22(Chart WB-15522). During negotiation STE indicated that its organization atheadtquarters and regions is under review and agreed to provide the Bank wthdetails of the new structure by August 31, 1976 for comments.
Staff and Training
5.01 During negotiations STE indicated that the separation ofthe postal and telecommunications staff was completed in early 1976and the number of staff taken over by STE numbered about 4l,600,which gives a ratio of about 28 per 1,000 telephones. This is reasonable.STE expects to gradually decrease this ratio in the coming years. A statementindicating the existing staff categories and numbers and the estimatedincreases in the 1976-80 period is at Annex 23.
5.04 STE has a telecommunications school housed in its headquartersbui'Lding in Damascus which trains technicians and skilled workers. Thisschool, with branches for both posts and telecommunications, was establishedby Decree in 1962. The technicians are trained in two stages. For thefir.st stage, about 75 candidates yearly are recruited from the intermediategrade schools and trained for two years with periods of practical trainingintorposed; thereafter they become junior technicians. For the second stage,about 45 candidates yearly are selected from experienced junior techniciansand trained for a further period of two years; thereafter they become seniortechnicians specializing in transmission, switching and networks. In addi-tiorn to the regular courses for junior and senior technicians, STE arrangesfor vocational training of jointers, equipment attendants, mechanics, etc.,and for refresher co-urses as required.
5.05 Engineers recruited from universities are given orientation andon-the-job training and, when appropriate, sent abroad for advanced trainingwith other entities and manufacturers. STE also makes use of fellowshipsoffered by other Governments and through UNIDP.
5.06 STE is constructing a new building for a new telecommunicationstraining school with an associated instituite for higher training. Assistancefrom the UNDP through ITU and several governments is expected for the pro-vision of equipment, experts and fellowships. STE is aware that its largeexpansion program requires a systematic manpower recruitment and trainingprogram. STE put forward an outline of a plar driLng negotiations which wasfound acceptable. STE has agreed +o de-elop this program further for dis-cussion with the Bank before Deceuber 31, 1976 and thereafter implement thatproeTam.
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Accounting and Audit
5.07 The Posts and Telecomnunications Establishment, with the assistanceof a Swiss expert, introduced a commercial accounting sytem on an accrualbasis in 1963. The accounts code on a numerical basis allows for the separ-ation of postal and telecommmnication operations, thus providing separatefinancial results for operations. The accounting system and its organizationare satisfactory and the system is functioning smoothly.
5.08 Although the accountinag staff are adequately qualified and com-petent, the senior staff would lbenefit from some exposure to accounting andfinancial management methods used by telecommunication organizations inother countries. During negotiations, STE agreed to make suitable arrange-ments for this purpose.
5.09 Following separation of the postal and telecommunications entitiesin July 1975 (para. 5.01), with effect from January 1, 1976, thefinances of STE are to be fully separated from those of the postal establish-ment. This will require STE to establish an opening balance sheet as of thatdate, which should also reflect Government's decision on STE's capitalization(Annex 26, Section B, para. 9). A commission has already been set up to workout the necessary details. During negotiations it was agreed that STE willprovide the Bank with a certifiegd copy of the opening balance sheet byJuly 1, 1976.
5.10 Billing and collection procedures are adequate. While the billingprocess in the Damascus Provincei is computerized, billing in the other pro-vinces is on a manual basis. However, STE has already taken steps to com-pletely computerize all billing operations and centralize them at itsDamascus headquarters. This is satisfactory.
5.11 STE's accounting procedures include a provision for both pre- andpost-audit. The pre-audit is carried out by STE's internal audit staff andthe post-audit on an annual basis by the General Audit Department, thestate agency responsible for auditing all state enterprises. The latteraudit is slow. So far, the audit of STE's 1972 accounts has not yet beencompleted. During negotiations it was agreed that STE will have its accountsannually audited, starting from 1976, by independent auditors acceptable tothe Bank and that certified financial statements together with the auditors'report will be submitted to the Bank not later than five months after theend of each fiscal year.
Insurance
5.12 Except for motor vehicles, STE has not made any provision forinsurance against losses on fixed assets such as from fire and theft. Thecost of this type of insurance is very high and STE's management feels thatthe wide geographical spread of its assets provides reasonable dispersionof risk. Moreover, being a public establishment, STE would be assisted byGovernment if serious losses occur. This is in line with the approachadopted by many State-owned teliecommunications entities; hence, STE'spolicy of not carrying insurance on its fixed assets other than motorvehicles is acceptable.
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fayments to Government
5.13 Apart from paying customs duties on imported equipment ranging from22,5 to 35% of the value of such imports, STE is limited by Decree No. 1935to retain 25% of its profits each year. In addition, in accordance withLaw No. 18, STE may keep its revenues to the extent that they are required tocover STE's operating and maintenance expenses and finance its investmentsunder Government approved expansion plans; STE has to transfer to Governmentthat portion of revenues which exceeds these requirements. In order to enableSTE to make a reasonable contribution towards financing the large expansionprogram, it was agreed during negotiations that Government will enable STEto retain out of its annual revenues such amounts as shall be necessary (a)to provide reasonable working capital, (b) to cover appropriate maintenanceancd renewal of its facilities and (c) to finance the investments requiredfor the expansion of its telecommunications services.
Tariffs
5.14 STE's tariffs, which require Government approval, have remainedessentially unchanged since 1972. A summary of STE's tariffs is given inAnnex 24. The basic features include a deposit before receiving serviceranging from LS 150 to LS 200 (US$40 - 54); installation charges of LS 500(US$135) for automatic subscribers and LS 300 - 400 (US$80 - 108) for manualsubscribers; an annual rental (no local call charges) of IS 72 (US$19.50)for subscribers connected to manual exchanges; an annual rental of LS 120(US$32.40) including 1,000 free local calls per year for subscribers con-nected to automatic exchanges. The charge for a local call exceeding thel,COO free calls is LS 0.10 (2.7 US cents). The charge to all subscribersfor long distance calls is LS 0.75 (20 US cents) per 100 km call distancefor each three-minute conversation. These rates are lower than those ofsimilar entities, which is further indicated by the low annual averagerevenue of about LS 406 (US$110) per subscriber. The corresponding revenues(in US$) for countries at a similar stage of development are as follows:
Egypt Iraq Ghana Pakistan Ethiopia India150 162 211 224 236 253
5.15 Although the low level of tariffs has been adequate to permitmoderate telecommunications expansion in the past, it would not sustainSTE's financial viability during the new expansion period. Government isaware of the need to raise tariffs to enable STE to make a reasonable con-tribution toward financing the large expansion and to fully cover its debtservice requirements. In this connectlon, STE has proposed to raise rentalsand call charges for automatic subscribers by 50% and to reduce the present1,000 free calls. STE also proposes to increase the installation chargefor new automatic subscribers from the present LS 500 to LS 1,000. Theseproposals are based on studies undertake-n by STE over the past three yearsand are designed to provide adequate reve-lues. The proposals are satis-factoiry and if implemented woull resu.t i-n an overall increase in STE'stelephone revenues of about 40%, whi-h is sufficient to meet its futurefinancing requirements (para. 6.10).
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5.16 STE expects that the proposed tariff revisions will cae intoeffect by October 1, 1976. Revenue forecasts for this report are based onthis assumption. During negotiations it was agreed that STE will increaseits telephone tariffs to produce annually at least 40% additional telephonerevenues as from October 1, 1976 ats compared with revenues under current tariffs.
6. FINANCES
Background
6.01 Before separation of the postal and telecommunications entitiesin July 1975 (para. 5,.01), the telecommunications operations were financiallyviable (para. 6.02) but the postal, operations were unprofitable. Previoustelecommunication expansion prograxs were of moderate size (about 15% growthannually) and were almost entirelyfinanced from the entity's own resources;hence the debt/equity ratio at end of 1974 was very low -- 3/97. Theexpansion during the 1976-78 period will increase net plant in service fromLS 150.9 million to LS 654.5 million, a more than fourfold increase. Inorder to meet the financing requirements (para. 6.10), STE will have to takeup substantial borrowings (Annex 26, Section B, para. 11) and also con-siderably increase its internal cash generation. It is estimated that withthe tariff increase (para. 5A16), internally generated funds including sub-scriber deposits would contribute, net of debt service, 27% of total require-ments; 73% of STE's financing requirements would be covered by externalborrowings and Government funds. Forecasts indicate that STE's earningsposition during the project period would be satisfactory.
Past Financial Performance
6.02 Income statements for STE's past telecommunications operationsduring 1970-74 are shown in Annex 25. Related notes are in Annex 26,Section A. A suimlary is given below:
1970 17l 1972 1973 17(Thousands of LS)
Revenues 33,098 34,856 37,600 41,423 61,996Expenses 21,755 23,085 26,915 29,778 35,185Operating income 11,343 11,771 10,685 11,645 26,813.Rate of return (%) 17.7 16.8 13.3 12.1 24.2Operating ratio (%) 66 66 72 72 57
6.03 The above results are satisfactory. The heavy increase in revenuesin 1974 by about 50% over 1973 and the resulting high rate of return werecaused mainly by changes in the billing process in that subscribers werebilled in 1973 for only three quarters and in 1974 five quarters wereaccounted for. Under normal conditions, the rate of return in 1974 would havebeen about 18%.
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Present Financial Position
6.04 Balance sheets reflecting the financial position of gTE's pasttelecommunications operations during the 1970-74 period are shown in Annex 27.Related notes are given in Annex 26, Section B. A summnary of the financialpos:Ltion as of December 31, 1974, is given below.
Is US$ %rThousandT )
AssetsFixed assets:
Gross plant in service 214,831 58,062 -Depreciation reserve 2.457 26,880 -Net plant in service 115,374 3,2Plant under construction 29965 809 15
Total fixed assets 339 39,281 nOther assets 6.502 1,757Net current assets 5203 140379 -24
Total Assets 205,044 55,417 100_WE- _
LiabilitiesEquity 189,177 51,129 93Subscribers' deposits 9,182 2,1482 4Long-term debt 6,328 1,710 3Deferred accounts net 357 96
Total Liabilities 205,044 55,1L7 100
6.05 The gross value of plant in service is based on original cost.Since the major part of the plant has been acquired during the past fiveyears and the obsolete plant is retired when its assessed lifetime ends, thepresent gross value is reasonably realistic. Moreover, any errors in thepast values of gross assets would become insignificant by the end of theproject period, when the value of gross assets would be nearly four timesthe 1974 figure.
6.o6 As of December 31, 1974, accumulated depreciation amounted toabout 46% of the value of gross plant in service at that date. This ishigh but justifiable in view of STE's strict depreciation policies(para. 6.05) under which depreciation is computed for each class of planton a straight-line basis. The composite rate is about 5%, which is reason-able.
6.07 The current ratio (excluding inventories) was 2.2, which is satis-factory. Among the items of current assets, the value of inventories rankedfirst and amounted to LS 29.8 (US$8.0) million. Although a small part oftotal assets, the holdings are high in view of the moderate size of thetelecommunications network. Inspection of some stores showed that there aremany items still included which are either obsolete or unlikely to be util-ized. This situation needs attention and it was agreed during negotiationsthat STE will from time-to-time consult with the Bank on the adequacy of itswrite-off policy with respect to the accounting of its inventories.
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6.08 As of December 31, 1974, accounts receivable amounted to LS 16.4million, of which IS 3.2 million (20%) was owed by private subscribers andIS 13.2 million (80%) by Government subscribers. Whereas private subscribersgenerally settle their bills on time and their outstandings in fact repre-sented less than one month's billings, the collection of Government accountshas been poor. During negotiations, assurances were obtained that in thefuture all Government subscribers will pay their current billings promptlywhen due.
6.09 As of December 31, 197h, subscriber deposits represented 4% ofSTEts capitalization. Because these deposits are repayable only if sub-scribers give up service -- and if they do, others will replace then --deposits are not considered as constituting long-term debt. On this basisSTE's debt/equity ratio was 3/97 on December 31, 1974. This ratio is verylow and is explained by the fact that past expansion was mainly self-financedand only to a minor extent was financed by medium-term suppliers' credits.
Financing Plan
6.10 Annex 28 shows the annLal sources and applications of funds duringthe past period 1973-74 and the forecast period 1975-80. On the basis Ofthese forecasts, which assume STE's future tariff revision (para. 5.16) andretention of its revenues as required (para. 513), the capital investmentand working capital requirements during the project period 1976-78, alongwith the sources from which they would be met, are summarized below.
Financing Plan fcor STE' a1976-78 Program
is US$ %TThousanNT
RequirementsCapital construction:
Proposed Bank assisted project 538,700 145,595 71Balance of STE's program 43,800 11,838 6STE's special project 149,000 40,270 20
Working capital 20,862 5,638 3
Total Requirements 752,362 203, 341 100
SourcesInternal cash generation 238,720 64,519 31Less: Debt service 54.915 14.842 7
Net internal cash generation 138305 49,677 7rSubscribers' deposits 16,800 4,540 3Borrowings:
Suppliers'credits 106,300 28,730 14Proposed suppliers3 credits 107,100 28,9946 14Proposed Bank loan2/ 94,350 25,500 13Proposed bilateral loan 108,000 29189 14
Total borrowings 415,750 12,365 T3gGovernment contribution 136,007 36.759 18
Total Sources 752.362 203,341 100
1/ About US$2.5 million of the proposed loan of US$28.0 million would berequired during 1979, i.e., after the nominal project period.
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6.11 The above financing plan estimates that internal cash generation,inc:Luding subscribers, depo dits, would contribute (net of debt service) about27% of total requirements for all purposes. This is acceptable in view ofthe large capital expansion during the project period.
6.12 Borrowings would cover 55% and equity contributions from Governmentwould contribute 18% of total requirements. Details are as follows:
(a) LS 106.3 (US$28.7) million would come from balances of securedsuppliers' credits.
lib) LS 107.1 (US$28.9) million is expected to come from additionalsuppliers' credits. STE provided the Bank with the final details,terms and oonditions of these credits during negotiations andconfirsed the availability of these credits.
(c) LS 108.0 (US$29.2) Million would be for STE's special project,for which disbursements are assumed to commence in 1977. Thisamount for the special project would form part of a bilateral loanfrom either the Federal Republic of Germany or Japan. Governmenthas already received the German proposals. The likely terms ofthis loan would be for 20 years, including a grace period offive years, and an interest rate of 2½*%. These terms have alsobeen assumed for the purpose of this report.
(d) The proposed Bank loan of US$28.0 (LS 103.6) million is assumedto be made for a term of 20 years, including a four-year graceperiod, with an interest rate of 8½%.
(e) The balance of funds not covered by internal cash generation andexternal borrowings would be of the order of LS 136.0 (US$36.8)million. During negotiations it was agreed that Government'scontributions towards financing of STE's investment program willbe in the form of equity.
6.13 The financing plan for the project period, which takes into accountthe tariff increases as from October 1976 (para. 5.16) and also disbursementsfor STE's special project (para. 6.12), is satisfactory. If STE's specialproject should be delayed for one to two years, which is possible, thiswould not only substantially iMprove the above financing plan but also would
- reduce the amount of funds which Government is required to contribute duringthe project period.
Future Finances
6.14 Forecast income statements and balance sheets for 1975, the projectperiod 1976-78 and thereafter up to 1980 are given in Annexes 25 and 27;related notes are in Annex 26. The main features of the forecast accountsare given below.
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1975 1976 1977 1978 1979 1980
Revenues (LS thousand) 67,100 87,878 131,500 159.,222 225,599 287,081Operating income (LS th.) 22,645 33,679 61,833 68,449 106,194 131,922Operating ratio (%) 66 62 53 57 53 54Rate of return (%) 17.0 16.7 18.6 12.8 13.8 13.5Debt/equity ratio 5/95 20/80 39/61 46/54 45/55 43/57Current ratio 3.5 3.1 2.9 3.0 2.9 2.9Debt service coverage 7.4 6.o 7.0 3.0 3.5 3.8
6.15 Operating revenues are projected to increase in proportion to thegrowth in subscribers and as a result of increased trunk revenues after theinstallation of adequate long distance facilities. The revenue projectionsalso reflect proposed tariff increases in 1976 (para. 5.16). Expense projec-tions reflect wage and other operating cost increases experienced in the past,adjusted for the anticipated higher staffing levels and the overall increaseof the network. As a result, the average annual growth rate of revenuesduring the 1976-80 period would be about 35% and the corresponding growth rateof expenses about 30% thus resulting in satisfactory operating ratios.
6.16 DLie to substantial borrowings required for financing STE's expansion,the debt/equity ratio will change from 5/95 at December 31, 1975, to 46/54December 31, 1978. Thereafter it -Ls expected that the ratio would graduallydecrease due to substantial repayments of debt. Despite STE's future substan-tial debt service requirements resulting from the above borrowings, internalcash generation would cover annual debt service at least 3 times throughout theforecast period 1975-80. In view of the satisfactory debt service ratio, thedebt/equity ratio is acceptable. ]However, to help ensure STE's future viability,agreement was reached during negotiations that STE will not contract long-termdebt unless the preceding 12 months' net revenues will cover the maximum futturedebt service at least 1.5 times.
6.17 With the proposed tariff increases (para. 5.16) and the initiallyslow increase of the assets base duaring the project period., it is estimatedthat the rate of return would be about 16.7% at the end of the first projectyear. Thereafter, as STE's major expansion adds rapidly to its assets, therate of return would drop to 12.8% in 1978, the last year of the projectperiod, and would be 13.8% in 1979 and 13.5% in 1980. Thus, a rate of returnon net assets of not less than 11% is considered to be a reasonable minimumlevel which could provide funds for capital servicing and for self-financingof a reasonable proportion of construction requirements. During negotiations,agreement was reached to maintain tariffs at a level sufficient to produce anannual rate of return of not less than 11% on the average net fixed assetsreasonably valued.
6.18 On the basis of tentative forecasts, itAis expected that STE willoontinue to be financially viable after the 1976-80 program period.
6.19 Indicators that will help to monitor STE's performance are givenin Annex 29.
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7. AGREEMENTS REACHED AND RECOQMENDATION
7.0] During loan negotiations, agreements were reached that STE shall:
(a) submit to the Bank for review the technical alternatives foruse of microwave or UHF radio for the spur routes (4.10);
(b) provide the final organizational structure of its head-quarters and regions (5.02);
(c) present before December 31, 1976, its program for manpowerrecruitment and training, and thereafter implement thatprogram (5.06);
(d) make arrangements satisfactory to the Bank for the trainingof its senior staff in accounting and financial managementmethods (5.08);
(e) provide the Bank with a certified copy of the opening balancesheet not later than July 1, 1976 (5.09);
(f) employ independent auditors satisfactory to the Bank and submitaudited financial statements to the Bank within five monthsafter the close of each fiscal year (5.11);
(g) increase its tariffs annually as from October 1, 1976, (5.16);
(h) consult with the Bank on the adequacy of write-off policieswith respect to accounting of its inventories (6.07);
(i) not contract long-term debt unless the preceding 12 months'net revenues will cover maximum future debt service at least1.5 times (6.16); and
(j) maintain tariffs to produce an annual rate of return of notless than 11 (6.17).
7.02 Agreements were also reached that Government shall:
(a) enable STE to retain amounts required to (i) provide reasonableworking capital, (ii) cover appropriate maintenance and renewalof its facilities, and (iii) finance investments required forexpansion of telecommunication services (5.13); and
(b) take all steps to ensure that Government subscribers will pay, current billings on a timely basis (6.08).
7.03 The project is suitable for a Bank loan to STE of US$28.0 millionequilralent for a term of 20 years, including a grace period of four years.
ANNEX 1
SYRIA
MYRIMN TELECOIffUICATION ESTABLISHMENT (STE)
Basic Data(As of December 31, 1974)
A. Telenhone Facilities
Total number of telephones in service .......... .......... 152,h46
Total number of DELs (Direct Exchange Lines) .......... ... 116,587
(a) automatic .......................................... 102,752
(b) manual ............................................. 13,835
Number of teleDhone exchanges .................. ... L....... 11
(a) automatic ..... ..................................... 17
(b) manual ............................................. 97
Capacity of teleDhone exchanges
(a) automatic .......................................... 1LO,200
(b) manual .......................................... 15,000
Exchange fill (automatic) ................................ 73%
Waiting list .......................................... 121,880
B. TeleDhone Traffic (annual)
Total number of domestic long distance calls ............. 4,512,5h3
Total number of international calls . . 900,496
Total international teleDhonie traffic minutes .... h........ .05h,52h
C. TelegraDh and Telex
Number of telegrqnh offices .............................. 158
Number of telegrams (annual)
(a) domestic originated ................... 207.000
(b) incoming and outgoing international ................ 593,000
Februarv 6, 1975
ANNEX 2Page 1 of-2 pages,
SYRIA
SYRIAN TELECOMMUNICATION ESTABLISHMENT (STE)
Ecisting Facilities
LDcal Telephone Services
1. At the end of 1974, Syria had about 116,600 direct exchange lines(DELs) and 152,450 telephones. The registered waiting list was about1:21,880 out of which about 55,070 were in Damascus and 22,400 in Aleppo,the two major cities in the country. The total number of telephone exchangesin the country was 114 out of which 17 were automatic and the rest weremanual. The total capacity of automatic telephone exchanges in the countryo0n December 31, 1974, was about 140,200 lines and consists of 7 D Rotarysystems manufactured by BTM of Belgium and Budavox of Hungary with laterinstallations of the EMD system from Siemens, Germany. The distribution ofthe exchanges by location is given in the statement in Annex 11. The manualexchanges in the country have a total capacity of about 15,000 lines. Theseare mostly magneto type and a substantial number have been assembled in Syriaby a company licensed by LM Ericssons of Sweden. The subscribers' sets arealso assembled by a local factory.
2. The outside plant network consists of underground cables, usingabestos cement ducts and cables drawn through these ducts in the center ofmain cities. Outside of these areas, armored cables are laid directly in theground with use of self supporting aerial cables in some areas. Cabinets arefairly widely used to provide flexibility between primary and secondary cables.The distribution for subscribers is mostly by means of drop wire and in someareas by open wire lines. The junction cables and main primary cables inDamascus and Aleppo are kept under gas pressure to prevent water ingress andfacilitate detection of leaks and repairs. Ilue to extensive construction inthe major cities, damage to cables is frequent in spite of coordination withmurnicipal authorities and other utilities.
Long flLstance Services
3. Long distance facilities between the main cities is provided bymidcrowave or coaxial cables with open wire carrier systems being used toconnect minor centers in the rest of the country. Details are shown inMap IBRD - 12015R. The main microwave network connects Damascus with Homsand Aleppo with spurs to Latakia, Raqqa, and Hama. This network was installedin 1966 and in certain sections, such as Homs, Shaikh Dahir, and Aleppo,the distances between stations are too long for satisfactory propagationand affect the quality of transmission. Besides STE has found it difficultto obtain spares for this system which is obsolete. STE is proposingtherefore to replace the equipment and redesign the system to meet ITUstandards. A two tube 1.2/4.4 mm coaxial cable system connects Damascus withDaraa in the south. The main open wire routes cross Syria from north tosouth and across the northern and eastern parts. Subscriber trunk dialing
ANNEX 2Page 2 of 2 pages
service is available to a limited extent in the country. At present STDservice is available between Damascus, Dera, Zabedani, Homs and Hama, andalso between Raqqa and Deir-ez-Zor and Hassake. The service from Latakiatowards Damascus is in one direction only. Its introduction on a widerscale is held up due to lack of circuits in adequate number and quality(see Annex 16) also. Toll ticketing has been adopted for recording andcharging long distance calls.
International Services
Syria has both coaxial and microwave links to Lebanon which pro-vide good quality circuits. However, due to non-completion of the trunkswitching center in Damascus there are delays in establishing connections.A two-tube 1.2/4.4 mm coaxial cable links Damascus with Amman (Jordan).As a temporary measure, Syria uses the earth station facilities in Jordanand Lebanon to work directly withL USA, Kuwait, Saudi Arabia, and Bahrein.Syria has also circuits via Lebanon for connection to Egypt and Europe bymeans of submarine cables (Beirut-Alexandria-Italy). In addition, Syriais connected by open wire carrier systems with Turkey and Iraq and HF radiocircuits with Cuba and Peoples Republic of China.
Telegraphs and Telex Services
The major centers in Syria are provided with teleprinters forthe public telegraph service. Other cities are equipped with manual Morsecircuits. Telegrams are also transmitted by telephone from many villageswhere there is an STE operated telephone exchange. The manual telexexchange in operation since 1970 was replaced by a new telex exchangewhich was installed in Damascus :in August 1974 and handles internationaltelex traffic at present. The installation of telex at other centers hadbeen held up due to lack of circuits between the centers (see Annex 15).
April 2h, 1976
SYRIA
SYRIAN TELECOMIJNIATIONS YSTASLIISPYT (STE)
Inter.ational Telephone Statistics
GROSS NATIONAL TELEPHONES - JANUARY 1975POPULATIONI/ PRODCT NATIONAL P RINCIPAL CITIES NEST OPFT
Ac. AnnualPer Capita Growth Rate Percentage Percentage
Jar,. 1, 1975 Per Capita Growth Rate Total No. Per 100 (1965_75) Actinatizatioc Total No. Per 100 of National Total No. Per 100 of NationalCOUNTRY (OOO'B) us$ (1965-73) (SoO'e) Population ,% _ (004'o) Population % (00Co') Population j
AFRICAAlgeria 16,643 570 4.3 230 1.38 5.2 79.7 178 6.4 77.4 52 0.4 22.6Egypt, Arab Rep. of 36,730 250 o.8 503 1.37 n.a. 96.7 364 4.0 72.4 139 0.5 27.6Ethiopia 27,495 90 1.6 66 o.24 12.1 88.5 52 3.4 78.8 14 0.1 21-2Morocco 16,726 320 2.5 189 1.13 2.5 82.0 128 3.2 67.7 61 0.5 32.3Nigeria 69,674 210 8.3 111 o.i6 6.4 83.4 68 3.9 61.3 43 0.1 38.7Rhodesia 6,205 430 3.5 172 2.77 6.2 93.4 138 14.2 80.2 34 p.7 19.8South Africa e4,914 1,050 2,0 1,936 7.77 5.5 82.6 1,399 24.2 72.3 537 2.8 27.7Sudan 18,112 130 _o.6 56 0.31 4.5 91.4 49 3.0 87.5 7 0.1 12.5Tunisia 5,628 46o 4,9 114 2.03 12.7 92.6 49 2. 443o 65 1.8 57.0Eambia 4,687 430 -0.2 68 1.45 8.2 97.8 29 3.3 42.7 39 1.0 57.3
AMERICAArgentinE 25,225 1,640 2.9 2,374 9.41 4.9 96.8 1,378 18.9 58.1 996 5.6 41.9Brazil 106,069 760 6.o 2,652 2.50 7.7 94.6 1,992 8.3 75.1 660 o.8 24,9Canada 22,661 5,450 3,5 12,454 54.96 5.9 97.8 6,254 59.0 50.2 6,2oo 51.5 49.8Colombia 25,025 44° 3.1 I,I86 4.74 11.5 99.7 813 7.8 68.6 373 2.6 31.4Costa Rica 1,960 710 3.5 98 5.02 16.i 99.0 88 10.5 89.8 10 0.9 10.2E1 Salvador 4 o65 350 o.8 50 1.22 8.6 97.2 44 2.9 88.o 6 0.2 12.0Mexico 58,265 899 2,8 2,546 4.37 13.4 94.8 2,069 10.2 81.3 177 1.3 18.7Trinidad & Tobago i,o6o 1,310 2.2 66 6.26 6.o 99.9 41 41,8 62.1 25 2.6 37.9U.S.A. 212,013 6,200 2.5 143,427 67.65 5.0 99.9 75,904 73.3 52.9 67X3 62.1 47.1Venesuela 11,918 1,630 1.3 554 4.65 7.9 99.2 477 9.3 86.1 77 1.1 13.9
ASIAChina, Rep. of 15,856 66o 7.3 901 5.68 19.8 92.5 591 12.0 65.6 310 2.8 34.4India 582,596 120 1,5 1,690 0.29 8.4 82.3 879 2.7 52.0 an 0.2 48.oIndonesia 123,840 130 4.5 285 0.23 3.4 63.3 201 1.4 70.5 si 0.1 29.5Iran 33,565 870 7.4 806 2.40 i6.1 94.1 541 5.3 67.1 265 1.1 32.9Iraq 10,770 153 1.42 9.4 93.1 126 2.9 82.4 27 o.4 17.6Israel 3,408 3,010 6.7 735 21.57 13.1 100.0 562 30.9 76.5 173 10.9 23.5Japan 110,626 3,630 9,6 41,905 37.88 13.1 97.4 26,527 42.9 63.3 15,378 31.5 36.7Malays4a 11,738 570 3.7 259 2.21 7.9 96.6 n.a. n.a. n.a. n.a. n.a. n.S.Nepal! 12,423 90 -0.1 11 0.09 13.9 n.a. n.n. n.S. n.a. n.a. n.a. n.a.Pakistan2! 69,70o 120 2.5 214 0.31 5.9 83.0 n.a. n.S. n.m. a.a. n...Philippines 40,941 280 2.6 446 1.09 u.4 96.o 374 4.3 83.9 72 0.2 16.1Si2 2237 1,30 2 2.53 13.5 100.0 280 225 100.0 - -2yri<V 7,121 - 8 152 2.14 7. 9.7 82.9 26 0.6 1Thailand :41,036 20 4.5 271 0.66 15.3 96.0 234 4.4 86.4 37 0.1 13.6
EUROPEFr nct 52,742 4,54o 5.0 12,405 23.52 8.1 94.o 4,546 46.2 36.7 7,859 18.3 63.3Germany, Fed. Rep. of 62,040 5,320 4.0 I8,767 30.25 8.7 100.0 8,185 46.i 43.6 10,582 23.9 56.4Sweden 8,178 5,910 2.4 5,178 63.32 4.3 100.0 2,529- 75.1 48.9 2,649 55.1 51.1Swit.erl nd 6,375 6,100 3.0 3,790 59.46 5.9 100.0 1,798 76.2 47.4 1,992 49.6 52.6Turkey 39,127 6oo 4.4 9g0 2.30 11.3 78.9 618 8.6 68.7 282 0.9 31.3U.K. 56,102 3,o60 2.3 20,342 36.26 7.4 99.9 8,087 45.8 39.8 12,255 31.9 60.2U.S.S.R. 253,323 2,030 3.5 15,782 6.23 8.2 94.8 4,234 17.4, 26.8 n1,548 5.1 73.2Yugoslavia 21,243 1,o60 6.o 1,143 5.38 11.9 97.2 532 17.3 46.6 611 3.4 53.4
OCUANIAAustralia 13,337 4,350 3.0 5,000 37.49 6.5 95.2 3,804 42.9 76.1 1,196 26.8 23.9New Zealand 3,106 3,680 2.0 i,495 48.12 4.5 92.7 1,135 53.0 75.9 360 37.4 24.8
SOURCE:
1. GNP Statistics: World Bank Atlas 1975.
2. Telephone Statistics: World Telephones by AT&T (1975).
NOTES:
/ Population at January 1, 1975 derived from the "Total Telephones" and "Telephones per 100 Population" appearing in AT&T'spublication, World Telephones (January 1, 1975).
/ Telephone and population statistics for Nepal and Fakistan are not available in AT&T's World Telephones (January 1, 1975). Thefigures shown are estimates derived frq information available from reports in the BankC.
1 Telephone and population statistics for Syria is not available in AT&T's World Telephones(January 1, 1975). The above fig-res arederived from STE's Statistical Abstract of Teleco-uonications, 1975.January 20, 1976
SYRIA
SYRIAN TELECOMMUNICATIOOIS ESTABLISHMENT (STE)
Distribution of Telephones in Urban and Rural Areas(as of December 31, 1974)
Urban * Rural TotalTotal Per 100 Total Per 100 Total Per 100
Population Telephones Population Population Telephone Population Population Telephone Population
Damascus City 973,271 65,07Q 6.69 - - - 973,271 65,070 6.69
Damascus 202,453 1,985 o.98 494,933 3,216 o.6s 697,386 5,201 0.75
Dar'a 37,584 1,643 4.37 229,087 279 0.12 266,671 1,922 0.72
Sweida 43,659 1,486 3.40 115,588 366 0.32 159,247 1,852 1.16
Homs 282,757 11,o88 3.92 331,142 524 o.16 613,899 11,612 1.89
Hama 197,118 7,589 3.85 389,321 614 0.16 586,439 8,203 1.40
Tartous 61,549 4,383 7.12 279,1411 928 0.33 340,960 5,311 1.56
Lattakia 164,875 8,822 5.35 270,127 409 0.15 435,002 9,231 2.12
Idleb 92,181 3,067 3.33 329,034 1,017 0.31 421,215 4,o84 0.97
.Aleppo 792,990 29,205 3.68 691,268 73 0.01 1,484,258 29,278 1.97
Al Rakka 43,801 2,182 4.98 231,408 4 0.02 275,209 2,186 0.79
Deir-ez-Zor 98,141 3,302 3.36 227,913 47 0.02 326,054 3,349 1.03
Al Hasakeh 105,663 4,695 4.44 416,868 452 0.11 522,531 5,147 0.99
Qunetra - - - 18,811 - - 18,811 - -
Total 3,096,042 144,517 4.67 4,024,911 7,929 0.20 7,120,953 152,446 2.14
Source: 1. Syria Telecommunications Establishment, Statistical Abstract of Telecommunications, 1975.
2. Syria Central Bureau of Statistics, Statistical Abstract, 1975.
January 26, 1976
ANN= 5
SYRLA
SYTIAN T5LECOMMUNICATIONS 1STABLISMENT (STE)
Growth of Local Telephone Network(As of December 31)
Growth Rate (%)Waiting Expressed Waiting Expressed Telephone
Year DELs List Demand 2 DELs List Demand AvailabilityY
1964 52,981 35,254 88,235 - - - 60.01965 56,884 37,587 94,471 7.4 6.6 7.5 60.21966 62,456 40,271 102,727 9.8 7.1 8.7 60.81967 66,118 42,941 109,059 5.9 6.6 6.2 60.61968 69,850 44,952 114,802 5.6 4.7 5.3 60.81969 74,660 48,337 122,997 6.9 7.5 7.1 60.71970 79,792 52,213 132,005 6.9 8.o 7.3 60.41971 87,987 64,755 152,742 10.3 24.0 15.7 57.61972 98,730 81,395 180,125 12.2 25.7 17.9 54.81973 108,947 97,888 206,835 10.3 20.3 14.8 52.71974 116,587 121,880 238,467 7.0 24.5 15.3 48.91975 132,425 137,679 270,104 13.6 13.0 14.5 48.51976 153,425 151,531 304,956 15.8 10.0 11.7 50.31977 184,425 155,088 339,513 20.2 2.3 11.3 54.31978 219,900 157,110 377,010 19.2 1.3 11.0 58.31979 298,900 118,794 417,694 35.9 -24.4 10.8 71.51980 402,900 58,934 461,834 34.7 -51.4 10.6 87.2
SOURCE: Syrian Telecommunications Establishment, Statistical Abstract ofTelecommunications, 1964-1975. For 1975-80, the table shows eitherplanned figures (DELs) or projections.
NOTE): l/Expressed Demand - DELs + Waiting List.
2/Telephone Availability * DELs/Expressed Demand x 100
April 21, 1976
SYRIASYRIAN TELECOMMUNICATIONS ESTABLISHMENT (STE)
Growth of Local Telephone Network
500,000 . 1 I
ACTUALS _ PROJECTED
400,000C t + t _ _ _ __
3 00.000_ . -4HFVYER
.~~ Ii< PANDDL
E%P REs ~~ l - DEMAND- I
u-II
[ DELS l O_ _ | . l l l ~ ~~~~~~~~LANE DELS
0W Bj~ ~ ~~~~~~~~~~~P4
200,00 - -4TH FIVE YEAR~~~~~~~~~~~~~~~~~~~~~~~~~~~~~000
* -~~~~ UNSATISFIED
____________ - ~~~~~~~~~DEMAND
1965 66 67 68 69 70 71 7f2 73 74 75 76 77 78 79 1980 <iYEAR EN~DING DECEMBER 31
World Ban k-i1 5521
SYRIA
SYRIAN TELECOMMUNICATIONS ESTABLISHMENT (STE)
Acceses to Te-lep4ones for Villages
(For villages with more than lOCO population anticipated by 1980)
Villages With More Villages With Villages With Villages With Less Than 1000 PopulationThan 1000 Population Telephone Exchange Cabinet Telephone!! Villages With No Telephone Villages With Villages With
Province Number 1970 Population Number 1970 Population Number 1970 Population Number (%) 1970 Population j% Exchange Cabinet Telephone
Damascus 144 506,o40 14 102,978 45 133,210 85 (59.0) 269,852 (53.3) 1 11
Darla 65 176,934 6 44,277 21 67,597 38 (58-5) 65,o60 (36.8) 0 1
Sweida 39 62,793 3 7,813 28 44,261 8 (20.5) 10,719 (17.1) 10
Homs 88 164,345 4 14,141 27 75,700 57 (64.8) ,(453) 15
Hama 100 180,207 3 17,389 21 49,944 76 (76.0) 112,874 (62.6) 1
Tartous 55 64,386 7 14,130 15 18,036 33 (60.0) 32,220 (50.0) 2 13
Lattakia 51 70,335 3 5,678 7 9,189 41 (80.0) 55,468 (78.9) 1 11
Idleb 86 165,983 7 40,013 32 70,500 47 (54.7) 55,470 (33.4) 1 12
Aleppo 131 221,006 1 8,531 17 44,017 113 (86.3) 168,458 (76.2) 2
Al Rakka 68 106,647 0 0 3 6,239 65 (95.6) 100,408 (94.1) 1
Deir-ez-Zor 88 150,338 1 2,074 1 1,952 86 (97.7) 146,312 (97-3) 1
Al Hasakeh 27 54,524 5 27,243 1 1,532 21 (77-8) 25,749 (47.2) 5
Total 942 1,923,538 54 284,267 218 522,177 670 (71.1) 1,117,094 (58.1) 5 83
SOURCE: 1. Syrian Telecosmunications Establishment, Statistical Abstract of Telecommunications for 1974
2. Syrian Telecommunications Establishment, Statistical Abstract of Cabinet Telephones for 1974
3. Central Bureau of Statistics of Syria, List of villages with more than 1000 population and anticipated by 1980
NOTE: L/ STE clacsifies small magneto exchange not exceeding about 10 lines capacity operated by an agent for public use as "cabinet telephones".
January 14, 1976
SYRIA
SYRIAN TEIECOMMUNICATIONS ESTABLISHMENT (STE)
Size of Villages without Telephones by i970 Population&'
Province Population
700-900 901-1100 1101-1300 1301-1500 1501-2000 2001-5000 over 5000
Damascus City
Damascus 8 19 10 11 11 20 6
Dar'a 8 5 4 6 6 9
Sweida 3 2 3
Homs 15 18 6 7 2 9
Hama 10 20 17 9 8 10 2
Tartous 14 12 7
Lattakia 9 10 4 7 5 6
Idleb 11 15 6 7 6 2
Aleppo 27 30 22 7 13 12 2
Al Rakka 10 19 13 10 9 3 1
Deir Ez Zr 11 15 11 13 16 19 1
Al Hasakeh 7 6 4 1 1 2
Total 133 169 106 78 80 92 12
1/ The population figures given are based on the 1970 census data but villages with population less than1000 have also been included wherever their population is expected to reach 1000 or above by 1980, inaccordance with the growth rate of 3.5% p.a.
January 23, 1976
SYRIA
SYRIAN TELECONIUNICATIONS ESTARLIShlENT (STE)
Telephone Subscribers by CStegocy (for Small Exchange-)
\ Eaechange | Deir ~-Are\amasc As Pr . ince Dar's Saeida A Ie E1 Idleb Al Haeaeh ez Zor Al Rakka Homs Fhe Tertous Lattakia
M. flaim El. Ra l.user \ &I Fn a SDr ys 5e1 Kotaifel KEsei Ezra Shahabe Eaza Arab Sarakeb Ai M alkieh 4ysadin Tel Abiad Tel ohaf Sfcelbei Db heb Total S
Go,ermaent I 12 22 10 24 17 23 21 14 29 32 30 20 29 26 19 24 372 17.8
Cabinet Telephones I I ' 1 1 3 5 2 1 1 2 1 1 1 2 2 2 2 39 1.9
Shops - 9 1 6 25 6 14 32 17 19 42 31 25 5 8 29 8 333 i6.0
Sall Iodoatr.ea 6 8 1 1 1 1 26 1.2
}ar.ee 3 3 1 7 0.3
Tradern 20 9 4 1 1 32 4 17 30 nlo 5.7
Seataoramta & Cafes 3 2 1 1 3 8 1 3 2 3 2 29 1.4
Auto Service Facilities 1 1 2 1 2 3 2 4 4 3 5 3 2 3 3 3 42 2.0
General Offices 1 I 1 1 2 5 1 2 2 6 2 2 1 27 1.3
Educational aw,dReligious Facilities 1 2 4 1 3 1 12 0.6
Dnctere Otfct e andPharbAcies 2 2 6 5 4 3 8 1 5 10 2 1 49 2.4
Cineass 2 7 1 1 1 1 13 o.6
Union and Clut 1 2 2 3 6 1 2 3 1 8 3 3 3 1 3 42 2.0
Society 1 1 1 1 4 1 9 0.4
Hotels 1 1 6 8 0.4
0the r RuA1eeseTelephones 4 1 1 1 1 0.2
Telepbons atBRsidential L,cations 76 5s _ 8 93 45 52 45 26 42 44 50 116 5 94 71 75 45 954 45.8
Total 12d 113 3j 40 145 87 98 112 90 90 139 140 242 43 169 149 145 91 2,o84 100.0
% of Telepbones t 1/Redldential Locationw' 3 59.4 49.6 33.3 20.0 64.1 51.7 53.1 31.7 28.9 46.7 31.7 35.7 47.9 11.6 55.6 47.7 51.7 49.5 45.8
90UBCE: Telephone DirectorIes for each exchange area
/ Telephones at residential locatiSoc are not clasoifi.d by use but by location.Further breakdown of these telephonee by use is at Annem 9.
January 19, 1976
SYRIA
SYRIAN TELECORPSiNICATIONS ESTABLISBNEqT (STE)
Telephone Subscribers at Residential Locations (for Small Exchanges)
\Exphange jDeirlae| Damascus Province Dar'a Sweida Aleppo Idleb Al Hacakeh ez Zor Al RakkA HoMn He" T'tos Lattakis
Ain E Ain El Ra,as ElUser B abbiela Daraya Fijeh Kotaifeh Keswi Ezra Shahaba Eazaz Arab Sarakeb Ain Malkieh Mayadir Tel Abiad Tel Karakh Skelbeih Drekish Heffeh Total %
Pablic Officialsand Employees 17 30 2 7 33 28 17 9 5 2 1 8 11 3 41 17 35 26 292 30.6
Teschers 1 5 3 8 2 9 1 10 2 1 6 1 11 1 27 5 93 9.7
Driverz 3 2 18 1 5 5 7 4 2 10 14 13 1 6 1 92 9.6
Osiners of SmallIndustries 4 2 1 1 1 2 2 6 2 1 22 2.3
Contractors 1 3 2 2 2 1 2 13 1.4
Engineers 2 1 1 1 1 6 o.6
Lawyer. 1 2 1 1 1 4 1 3 2 16 1.7
Doctors 1 3 2 1 3 1 1 3 2 1 5 1 1 3 28 2.9
Phareacy Owners 1 1 1 2 2 1 2 1 11 1.2
Faroers 18 8 1 14 1 7 25 7 7 8 19 37 10 48 4 214 22.4
Workers 15 6 10 2 2 1 1 33 3 73 7.7
Owners of Cafes 2 1 1 4 3 11 1.2
Owners of Shops 17 3 8 2 2 2 6 40 4.2
Merchants 5 1 6 2 12 15 2 43 4.5
Total 76 56 11 8 93 45 52 45 26 42 44 50 116 5 94 71 75 45 954 loo.o
Note: A further study of telephones at residential locationsfor Ai. El FiSeh revealed that about 70% of these telephonesare mainly used for productive purposes. In view of the JamiaY 15, 1976above distribution of s-bhrribers at residentia locations,it seems reasonable to assume that a similar pattern hDldsfor other exchange areas surveyed.
SYRIA
SYRIAN TELECOMMUNICATION ESTABLISHMENET (STE)
Analysis of Domestic Manual Long-Distance Calls(lst Quarter, 1975)
Analysis of Unsuccessful Calls (%)Total No. Successful Unsuccessful Trunk Line FaultsBooked Calls (%) Calls (%) Cancellation No Answer & Unclear Connections Other
Damascus 970 75.7 24.3 43.3 53.7 3.0
Sweida 227 80.2 19.8 44.o 25.0 4.0o
Homs 283 73.1 26.9 24.2 53.6 20.4 1.8
Hama 83 88.o 12.0 29.6 57.4 12.0 1.0
Tartous 266 67.3 32.7 52.9 29.0 16.1 1.0
Lattakia 237 70.5 29.5 16.7 82.8 1.5 -
Idleb 128 85.2 14.8 - 100.0 - _
Aleppo 1,140 74.0 26.o 37.3 58.9 3.1 0.7
Al Rakka 294 73.5 26.5 55.8 44.2 _ _
Deir-ez-Zor 239 72.0 28.0 32.7 59.9 6.6 o.8
Al Hasakeh 232 72.8 27.2 40.0 44.9 8.4 6.7
Source: ..yrian Tel-communications Establishment, Statistical Abstract forTrunk Calls between Main Cities, 1st Quarter, 1975.
January 26, 19760
ANNEX 11
SYRIA
SYRIAN TEIECOMMUNICATION ESTABLISHMENT (STE)
Growth of Telephone Traffic
Year Number of Domestic Long-Distance Calls International CallsLocal Calls Number Units of three Minutes Number Minutes(1,000) (1,000) (1,000) ' (1000
1964 107,248 2,651 3,376 523 2,310
1965 109,902 2,555 3,189 538 2,260
1966 116,499 2,900 3,671 602 2,389
1967 120,268 3,0o9 3,849 586 2,362
1968 131,696 3,171 3,998 592 2,331
1969 133,980 3,381 4,240 625 2,566
1970 150,420 3,570 4,519 676 2,795
1971 154,289 3,690 4,515 680 2,809
1972 163,793 4,090 5,049 683 2,782
1973 169,080 4,355 5,199 860 3,606
1974 179,703 4,513 6,379 900 4,055
Average growth rate (1971-74) 6.8% 16.7% 10.3% lh.0%
Source. Syrian Telecommunications Establishment, Statistical Abstract ofTelecommunications, 1964-o974.
January 26, 1976
SYRIA
SYRIAN TELECOMMUNICATIONS ESTABLISHMENT (STE)
Telecommunications Plan Investment (1976-80)(in Syrian LS millions)
Total (1976-78) Total (1976-80)1976 1977 1978 Program Period 1979 1980 Plan Period
Local Foreign Total Local Fore Total Local Foreign Total Local Foreign Total Local Foreign Total Local Foneign Total Local Foreign Total
Bank Assisted Project 54.9 106.7 161.6 67.2 100.2 167.4 67.8 141.9 209.7 189.9 348.8 538.7 - - - - - 189.9 348.8 538.7
Balance of STE's Program 1.8 - 1.8 3.8 21.2 25.0 6.o 11.0 17.0 11.6 32.2 43.8 74.5 76.8 151.3 51.2 69.8 121.0 137.3 178.8 316.1
200,000 Lines Special Project - - - 5.0 31.0 36.0 36.0 77.0 113.0 41.0 108.0 149.0 36.o 93.0 129.0 25.0 77.0 102.0 102.0 278.0 380.0
Total ProgramWithout Special Project 56.7 106.7 163.4 71.0 121.4 192.4 73.8 152.9 226.7 201.5 381.0 582.5 74.5 76.8 151.3 51.2 69.8 121.0 327.2 527.6 854.8
T0,tal ProgramWith .pecial Project 56.7 106.7 163.4 76.0 152.4 228.4 109.8 229.9 339.7 242.5 489.0 731.5 110.5 169.8 280.3 76.2 146.8 223.0 429.2 805.6 1,234.8
April 23, 1976
ANNEX 13Page 1 of 6 pages
SYRIA
SYRIAN TEILCOMMUNICATIONS ESTABLISHMENT (STE)
Description of Works in the Five-Year Plan (1976-80)
STE's fourth five-year plan forms part of Syria's fourth five-year(1976-80) plan and has the following major components:
(a) the ongoing works of the third plan period (1971-75)carried for execution in the period (1976-78);
(b) the new works proposed for execution in the 1976-80period;
including
(c) a "special project" for 200,000 additional telephonelines in the country.
A brief description of the major works included in the plan follows:
(a) Ongoing Works
1. 100,000 Lines END Local Telephone Exchange Equipment Installation
During 1975, STE contracted with Messrs. Siemens & Halske ofGermany for the procurement and installation of local automatic telephoneswitching equipment of 100,000 lines of EMD type in various centers. Itis proposed to install 19,000 lines in 1976, 44,000 lines in 1977 and thebalance of 37,000 lines in 1978. The details of the program of installa-tion are given at Annex 14. Financing of foreign cost is from Government'sown resources.
2. 29,000 Lines Electronic Local Telephone Exchange Equipment Installation
Under the auspices of a French Syrian Joint Cooperation Agreement,STE is contracting with CIT - Alcatel of France for the supply and install-ation of 29,000 lines of electronic local telephone exchange equipment ofE 10 - Platon Type. STE is finalizing the details of the program of supplyand installation and according to present estimates 13,000 lines will beinstalled by end 1977 and the balance of 16,000 by end 1978 details areavailable in Annex 14. Financing of foreign cost of this item is arrangedpartly through a supplier's credit and partly a French Government loan.
3. Junction and Local Cable Network Expansion 1976-78 and 1979-80
To complement the exchange expansions undertaken in items 1 & 2above, and to meet the demand for telephone connections, adequate expansionis planned to the outside plant network comprising the junction and localcable networks and the subscribers' installations. STE has planned toinsta:Ll about 87,000 additional telephone connections including about 12,000.
ANNEX 13Page 2 of 6 pages
manual corrections during the 1976-78 period. Financing for procurementof cables and accessories for this requirement is proposed under thepronosed Bank loan. During the 1979-80 period an additional 175,000 lineswill be installed out of Which about 100,000 lines are expected to beavailable under the special project.
4. Expansion of Telegraph Systems
This item covers mainly the installation of the telex exchangesin the country, the details of which are given in Annex 15. The installa-tions are planned in two stages, the first stage due for completion by1976 and the second by 1979. The equipment is of the electronic controlledcross bar type and supplied by CIT'4lcatel of France. The first stageexpansion is financed by a supplier's credit and the contract and financingfor the second stage is with France.
5. Telecommunication Training and Research Center
A new building is under construction in Damascus to house thetelecommunication training and research center. Training and test equipmentin the present training school in JPTE headquarters building will be shiftedto the new training center which is expected to be ready by mid-1977. STEis proposing to expand the training facilities and equipment using UNDP/ITUassistance and bilateral technical cooperation agreements with severalcountries.
6. Trunk Exchange Installations
STE has contracted with Messrs. Siemens and Halske, with financingfrom Government's re3ources, for the supply and installation of trunk ex-changes for subscribers' trunk diaLing, equipped also with toll ticketingfacilities. The initial contract provided for about 1220 incoming/outgoingtrunks at various centers. These installations will be completed in 1976.STE has placed a second contract with Siemens for expansion of these ex-changes by about 1650 incoming and outgoing trunks. This state is to becompleted in 1978. Details of both stages of installation are given inAnnex 16.
7. Damascus - Aleppo - Latakia - Palmyra Coaxial Cable Installation
A coaxial cable system with small diameter (1.2/4.4 mm) four tubesis under installation for this route by CIT-Alcatel of France. The scheduledcompletion dates of the major sectors of the system are as follows:
1) Latakia*-Tartous - end 19752) Tartous-Homs - mid 19763) Damascus-Homs-Palmyra - mid 1977b) Homs-Aleppo - end 1977
The foreign cost is financed by a French supplier's credit. The route ofthe coaxial cable system is shown in Map IBRD - 12015R.
ANNEX 13Page 3 of 6 pages
8. Homs - Ragga - Deir-ez-Zor - Hassake Microwave system Installation
A microwave system operating in the L GHZ band with a capacity of960 telephone channels, with a television channel for use by the Ministryof Information, is under installation by NEC of Japan. The scheduledcompletion dates of the major sectors of the system are as follows:
1) Homs-Raqqa - October 19762) Raqqa-Y Repeater-Deir-ez-Zor - February 19773) Y Repeater-Hassake - end of 1977
The foreign costs are financed from Government's own resources. The routeof the microwave system is shown in Map IBRD - 12015R.
9. Mosul - Hassake Microwave System
STE has entered into a contract in 1975 with Mitsubishi of Japanwith financing from Government's own resources for a microwave link betweenHassake in Syria to Mosul in Iraq for a 960 channel capacity system as amajor artery between the two countries. The system is expected to becommissioned by end of 1977; details are given in Map IBRD - 12015R.
10. Installation of an Earth Station
STE has entered into a contract with TELSPACE of France for theinstallation of a standard earth station at Sidnaya near Damascus to work-with the INTEISAT Indian Ocean satellite. Construction commenced inNovember 1975 and the station is expected to be in operation by the begin-ning of 1977. The station is being equipped to work with 72 channelscapable of extension to 192. The local and foreign costs financing forthe station is by Government.
11. International Telephone Switching Center
STE has entered into a contract in 1975 with CIT/France for theinstallation of an international telephone switching center in Damascus.Ihe center is to be equipped with 800 incoming and outgoing lines and willuse signalling System R2. The installation is expected to be completedin 1977. Financing of this has been arranged through a supplier's credit.
(b) New Works
1. Palmyra-Baghdad Coaxial Cable
A coaxial cable system with 4 tubes (1.2/4.4 mm) is proposed tobe installed from Palmyra as an extension of the existing system describedunder item 7 above up to the Iraqi border. Iraq will complete the systemup to Baghdad. This will provide an alternative main artery between thetwo countries, tentative dates of completion being end of 1978. STEanticipates that the financing of this could possibly be arranged underthe French Government loan.
ANNIKX 13Page 4 of 6 pages
2. Aleppo-Iskenderun Microwave System
STE expects to final'Lze with the Turkish PTT the details for amicrowave link between Aleppo in Syria and Iskenderun in Turkey with aview to finalize a contract for the equipment in early 1976. The scheduledcompletion date is December 1977. This link is designed to provide a960 channel system as a main a3rtery of communications between Syria andTurkey and will be financed from Government's own resources.
3. Tartous - Alexandria Submarine Cable
A submarine cable to link Syria and Egypt is proposed to be laidbetween Tartous and Alexandria. The capacity of the cable is proposedto be 480 channels and the distance is about 650 km. The financing ofthis cable is yet to be obtaiined. The supplier will be from France, UKor Japan.
4. Tartous - Crete Subm-arine Cable
A submarine cable is proposed to be laid between Tartous (Syria)to Crete (Greece) for connection to Europe. Negotiations are in progresswith the Greek Administration. The capacity of the cable proposed is480 channels and the distance is about 850 km. Financing of this link isyet to be arranged. The supplier will be from France, UK or Japan.
5. Expansion of Rural Networks
STE has a continuing program of extending telephone facilities tovillages at present without these facilities. At the same time to meetpending demand for telephone connections, the capacities of existingmanual exchanges at various clenters which are in large villages will alsobe expanded. During the plan period 1976-80, STE plans to install about20,000 additional telephone connections by expanding the manual exchangeswhere required. STE will also provide telephone service to about 800 newvillages by extending the open wire routes to these villages and install-ing public telephones. The financing of foreign cost for procurement ofmaterial for these extensions during the 1976-78 period is proposed underthe Bank loan. The balance of the requirement will be financed by STE andGovernment.
6. Stores, Workshops and Garages
During the fourth five-year plan STE proposes to construct newstore facilities at Tartous, Deir-ez-Zor, Swaida and Raqqa and two newworkshops and garages for the motor vehicles at Aleppo and Damascus.
7. Replacement of Damascus-Aleppo-Latakia-Ragqa Microwave System
STE proposes to replace the equipment on the existing microwavesystem which is nearly ten years old. The system in parts will be rerouted
ANNEX 13Page 5 of 6 pages
and additional repeaters will be introduced to improve transmission per-formance. The details are given in Map IBRD - 12015R. It is proposed tocomplete this work by 1978. Financing of foreign costs is proposed underthe Bank loan.
8. Spur Microwave/UHF Network
STE proposes to install microwave or UHF systems on spur routesto subsidiary centers to be connected to the main systems and also to providereliable standby systems on some of the existing routes. STE will be sub-mittinig to the Bank a technical report containing a study of the alternativesfor use of microwave or UHF with a view to determine the least cost solution.The links to be provided are as follows:
(1) Damascus-Tanf, (2) Homs-Palmyra via Khenefis, (3) Homs-Tartous, (4) Hama-Banias, (5) Tartous-Latakia, (6) Jable-Kerdaha, (7) Latakia-Kessa, (8) Aleppo-Djerablous, (9) Raqqa-Tall Abiad, (10) Hassake Ras Al Ain, (11) Hassake-Qamishliyeand (12) Deir-ez-Zor-Abou Kemal.
Details are given in Map IBRD - 12015R. It is proposed to complete constructionby 1978. Financing of foreign costs is proposed under the Bank loan.
9. Syria-Lebanon Cable and Microwave System
STE proposes to install a microwave system to connect Homs (Syria)with Flermal (Lebanon) and a coaxial cable from Tartous (Syria) to Tripoli(Lebanon). These will provide alternative routes to the existing DamascusBeirut, link. The scheduled completion date for both systems is 1979.Financing of the microwave system is expected from Government's own resourcesand the coaxial cable possibly from a French Government loan and/or suppliercredits.
10. Syria-Jordan Microwave System
STE proposes to install a microwave system between Damascus (Syria)and Amman (Jordan). This system will provide for 960 telephone channels anda television channel. STE proposed to call for bids in January 1976 and hasscheduled completion of the system for December 1977. Financing is expectedfrom C,vernment's own resources.
11. Second Antenna for Earth Station
STE proposes to add a second antenna to work with the INTEISATAtlantic Ocean satellite. The work is likely to commence in 1979.
12. Arab Regional Satellite Station
STE proposes to install an earth station to work with the ArabRegional Domestic Satellite system which is being planned. The scheduleddate of commencement is during 1978/79 with completion in 1980/81. Financingof this item is likely from the Arab Fund.
ANNEX 13Page 6 of 6 pages
13. Extension of the Intermational Telephone Switching Center
STE proposes to expand the international telephone switching centerfrom 800 lines to about 1,500 lines to handle the increase in internationaltraffic with the completion of the coaxial and microwave and satellite systemsin the five year plan. The scheduled completion of the expansion is during1980.
14. General Administration Building
With the separation of the postal and telecommunication entitiesand the need for additional space for both entities, STE has proposed toconstruct a new headquarters building. It is proposed to commence con-struction in 1977 and complete it lby 1979.
(c) "Special Project" for Telephone Expansion by 200,000 Lines
In order to meet the demand for telephones in Syria, STE intendsto carry out telephone expansion on an urgent basis with the installation of200,000 lines under a "Special Project". The tentative installation programis given in Annex 17. Government is discussing proposals for the specialproject with interested governments and suppliers.
April 22, 1976
SYRIA
SYRIAN TCzoamJIICaTns 3iT'BIIIT (on)AN= 14
Locl Antomtic Tlbepone nchne I.ntall.tio Program(For 100,000 Lines EYD ad 29,000 Liose Electronic)
Additions AddltionoCap-city Cnpaoity Proposed Month Proposed Month Capacity
0n on From 100,000 sod Yew From 29,000 ad Yeed AfterLocation Tl Deo. 31, 1970 Dec. 31, 1975 LiUne DO of S0ervice Lines Electronic of Service Ension Hrks
D-aco- City1. E-cheoge 1 Nor 7D 10,000 10,000 - - - _ 10,0002. 2 ne 70 10,000 10,000 - - 10,0003. " 3 Jol. 7D 10,000 10,ooo . 10,ooo4. 4 B Rogidnd EMD 10,000 10,000 - - - 10,0005. 9 EMD - 10,000 - - - - 10,0006. " 6 censo EMD _ 4,4 5,600 11/76 - - 10o0007. 7 Ruknelkin 4MD _ 3,500 6,500 4/77 _ _ 10,0008. 8 Mid.n 1 EYc - 3,500 6,500 11/77 - - 10,0009. ' 9 OldanO 2 E - 7,000 12/78 - - 7,000
10. '10 M,ba_iroo Electronic -- - - 13,000 3/79 13,00011. 11 b Y eh rg Electronic i- - 10,000 9/78 10,00
Onn--c City Total_4 _6lh0ii 2 0360 - 3.000 U 012. Zaldnli 7D 1,000 1,000 - - - - 1,0013. D-n 4YD - 1,000 4,000 9/77 - - 5,00014. Toil EYD - 1,200 1,000 7/78 - 2 20015. eichk El-ctronic - - 6,ooo 3/79 6,ooo
D-noso-s Provirce Total 41.000 64.600 30.69 - 29,000 - 124 20016. Doesl Province E41D - 00 3.800 12/76 - -17. OS . Provi-cc EMD I 22000 9/78 _ _1S. 0 0,etrn Prceinoe - - - - 7 -19 HoCty19. Oochnoe1 7D 3,800 3,800 -. - - - This ethng is proposed
2 2 4. wo 6, 76 10,000 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~to be taken out of serAp20. " 2 EYD1 - 4.000 6,000 9/76 _ _ 10, 00021. 3 EuD - _ 10,000 12/78 _ 10,000
HSoo Citty n Province Totel 3,800 8,00 16,000 - - - 20,000
22. Ench.ge 1 7D 2,600 2,600 - - This exchnge is propod
243 ' 2 EMD _ 2,000 4'o°0°o S§77 _ _ 1404000 to be taken Oue of serrice24. 3 0)0 -- 4,000 12/7 4,o00
H::n City onc. P-ovinco Total 5 600 4,600 12 000 - - _ 14 ODO25. Tattoos EKD 3, 3,0 12/70 - _26. OnJito E0M _ 1,200 - - - - 1,20027. CBrnWn EY - - 2,000 12/77 - _ 2,000
Tactoa, Province Tonal 3,000 4,200 5,000 - _ _ 9,200Lattbkia Cit
28. 0 Ioo6e 0 70 3,200 3,200 _- - - Thin eCohblge is prWeed
29. 2 EYD - 3,000 7,000 5/77 - - 10,000 to be tk.. out of .- i-30. 3 Emn - 6,ODO 12/78 _ - 6,00oLnttnkin Citi Total 3,200 _6200 13,000 - -
31. J,tlr 00£D 1,500 - - 1,500 This eohoe is litkly to
be cot over in 1976 only32. ""Ie,h'c EM11 - Bo Boo-- 0L*tonnin Proinc icini %3309 13,) oon 18,300
33. dlib EMD0 P0 2,00 - - 2,00034. jltres 2hOghDr N4D 1 1,200 - - - 1,200
Idlib Frownfre Total o.000 3.2i) _ _ _ _3 ie- o City 2 000 3200
35. Cochenge I 1 Jc,i11e 70D 14 17,400 - - 17,40036. 2 Elou Wnsbr 0)En - 8,000 2,000 8/77 - _ 10,00037 0 3 SI.oaoyhi E0D - ,000 2,00 6/7 30 4 E END 8 - 2,600 12/76 - -393 5 A-nni EMD - 4,000 6,000 11/77 - _ 10,000
Al0Ppo City dd P-roroce Total 37,4017,400 ,00 10 60 - - 50.00040. R0.1±. Proioce EMD1 1,533
0 /7
421. eirosnor Frovince 3D L5Go 5 0 5.0D Addition Or 3,500-ctary42. - - - - lflecpeote~~~~~~~~~~~~~~~~~~~~~~D.I d In 1976Ha-snk* EY D 3,000 3,000 - - i 3,06
43. Ke,ishly 7D 1,500 1,500 - - - - 1,500H sen.,k ProI nce T,tl 4,5 4.500 - - - -,500
GRANT TOTAL 0,50D 4), 9350 9,0 29.n 262.400
'InItn11ntion nt Qottre oill dopend on Its enton doring 1976-80 period April 24, 1976
01,500 line, of EYD Iqnin-t nr- spar-
SYRIA
SYRIAN TELECOMMUNICATIONS ESTABLISHMENT (STE)
Telex Exchange Installation Program (1976-80)
1st Stage 2nd StageCapacity of Year of Additional Capacity Year of Total
Location Exchange Service of Exchange Service Capacity (1979)
1. Damascus 350 1974 1050 1978 140o
2. Aleppo 35° 1976 250 1979 600Idlib 39Rakkal/
3. Lattali.a 100 1976 100 1979 200
4. Tartous 100 1976 100
5. DeirezzorHassakea 100 1976 100
6. HomsHamal/ 100 1976 200 1979 300
7. Deraa/Sweida - - 60 1979 60
8. Unallocated - 120 1979 120
Total 1100 1780 2880
1/ These exchanges will work as satellites.
April 21, 1976
I-I
SYR[A
SYRIAN TELEC(FMUNICATIONS ESTABLISHMNNT (STE)
Automatic Trunk Exchange Installation Program (1976-80)
1st Stage 2nd StageNumber of Lines Year of Number of Lines Year of
Location Incoming Outgoing Service Incoming Outgoing Service
1. Damascus 121 104 1975 217 216 19782. Aleppo 104 93 1976 116 1153. Sweda 8 10 1975 4 4 "4. Qunetra - - - 11 13 "5. Banyas - - - 6 7 "6. Jisreshoghur 16 20 1976 - - "7. Safita 11 16 0 O 18. Deraa 9 12 1975 5 29. Idlib 17 19 1976 - - "10. Tartous 33 34 1975 9 1811. Zabada 17 15 "4 1412. Deirezzor 39 42 ,, 52 3213. Kamishly 33 35 10 2214. Raqqa 15 15 tt 5 1715. Hassake 19 21 14 2216. Homs 68 70 99 8617. Lattakia 66 59 73 7718. Hama 29 31 " 4 1919. Jable 9 9 1976 1 1120. International Switching Center - - - 162 186
Total 614 605 792 862
December 23, 1975 H
ANNEX 17
C'VT7)-. ASL.J JU J¶
Sy 2 - JrJY2l JTCATI, ,;'•TA3LIS1ii-iALT (S5T )
200,00C Lines Special Prcject Installations
Additional Number of'Capacity New Buildings
Location of Exchanges Required
1. Damascus 90,00D 7
2. Duna 2,000 -
3. Aleppo 50,000 2
4. Homs 20,000 2
5. Hama 6,0o0
6. Tartous 4,000
7. Lattakia 14,OCO 1
8. Idlib 3,000
9. Raqqa 3,C0O 1
10. Hassake 2,000
11. Sweda 1,C00
12. Spare 5,000
Total 200,C000
January 21, 1976
SYRIA
SYRIAN TELECOMMUNICATIONS ESTABLISHMENT (STE)
Project Construction Costs
(LS thousands)
1976 1977 1978 Total
local Foreign Total Local Foreign Total Local Foreign Total Local Foreign Total
Telephone Exchange
Equipment 8,000 31,000 39,000 20,000 34,ooo 54,ooo 8,000 52,000 60,000 36,ooo 117,000 153,000
Subscriber Sets 2,000 - 2,000 2,000 - 2,000 2,000 - 2,000 6,ooo - 6,ooo
Cable Networks 10,000 20,000 30,000 13,000 11,000 24,000 14,000 21,000 35,000 37,000 52,000 89,000
Buildings for Exchanges 4,ooo 1,000 5,000 4,ooo 1,000 5,000 3,000 - 3,000 11,000 2,000 13,000
National Long Distance
Networks 15,000 29,400 44,400 5,500 22,825 28,325 3,200 5,550 8,750 23,700 57,775 81,475
Replacement Microwave
Networks - - - 500 1,000 1,500 4,500 9,000 13,500 5,000 10,000 15,000
Spur Microwave/UHFNetworks 800 - 800 4,ooo 3,600 7,600 8,720 14,160 22,880 13,520 17,760 31,280
International Networks 4,800 16,000 20,800 1,400 4,0oo 5,400 300 1,100 1,40o 6,500 21,100 27,600
Telegraph Networks - - - 1,600 6,200 7,800 1,700 6,500 8,200 3,300 12,700 16,000
Rural Networks 5,880 4,835 10,715 5,880 5,350 11,230 6,720 5,725 12,445 18,480 15,910 34,390
Telecommunication
Training Center 1,100 - 1,100 1,000 1,500 2,500 2,000 1,500 3,500 4,100 3,000 7,100
Contingencies 3,354 4,507 7,861 8,360 9,738 18,098 13,660 25,388 39,o48 25,374 39,633 65,007
Total 54,934 106,742 161,676 67,240 100,213 167,453 67,800 141,923 209,723 189,974 348,878 538,852
April 21, 1976
ANNEX 21
SYRIA
SYRIAN TELECOMMUNICATIONS ESTABLISHMENT (STE)
Internal Rate of Return
1. Benefit Period
The following analysis covers a period of 20 years after commissioning;a period related to the composite depreciation rate of 5%.
2. Net Benefits
Capital expenditures and operating costs under the project excludetaxes, duties and contingencies. Revenues and operating cost reasonablyassociated with the project were derived from the forecast income state-ments for the period 1976-79 (Annex 25).
A summary of project related cost, revenues and net benefits at con-stant 1975 prices (In LS millions) is given below:
Capital Operating NetYear Cost Cost Revenues Benefits
1976 123.8 4.3 10.7 (117-4)1977 129.2 11.0 34.6 (105.6)1978 146.2 19.0 59.5 (105.7)1979-1997 - 33.7 119.0 - 85.3
3. Rate of Return
On the basis of the above data the internal return on the project,defined as the discount rate which equalizes the stream of net benefitsas above, i8 20.6%.
4. Sensitivity Analysis
A sensitivity analysis produced the following results:
Rate of Return
(i) 20% increase in capital cost 16.8%
(ii) 20% increase in operating cost 18.7%
(iii) 10% decrease in revenues 17.4%
(iv) 10% increase in capital and operating cost and10% decrease in revenues 14.7%
April 25, 1976
SYRIAN TELECOMMUNICATIONS ESTABLISHMENT (STE)ORGANIZATION CHART
BOARD OF DIRECTORS
DIRECTOR STDIRESTO &DMINTENANCE DIRECTOR DIRECTOR DIRECTOR DIRECTOR
RESEARCH ESTUTION MAINDTEXPONATION TRAINING FINANCE & SUPPLY PLANNING AND ADMINISTRATION
DIVISION DIVISION DIVISION PRINCIPAL DIVISION DIVISION DIVISION
CHIEFS CHIEFS CHIEFS l CHIEFS CHIEFS CHIEFS
REGIONAL DIRECTORS
DAMASCUS HOMS L A KZ ALAKWEDA UAR-AAEUNEITRA
World Bank-15522
SYRIA
SYRIAN TELECOMMUNICATIONS ESTABLISHMENT (STE)
Estimates of Staff Requirements
TotalExisting Additions during Plan Period Additions Total Staff
Category 1975 1976 1977 1M 1979 1980 1976 - 50 at end of Plan
Technical Staff
1. Eigineers 90 8 12 18 20 22 80 1702. Senior Technicians from STE School 200 45 45 45 45 45 225 425
3. Senior Technicians (directly recruitedand trained on job) 505 86 100 142 155 227 710 1,215
4. Junior Technicians from STE School zoo 15 15 30 30 60 150 3505. Jointers, Linesmen and Test Operators 1,000 160 290 260 390 h60 1,560 2,560
Administrative and Operational Staff
1. Senior AdministrativeAccounts and Operations 140 10 15 17 23 24 89 229
2. Junior AdministrativeAccounts and Operations 445 31 35 122 131 190 509 954
3. Clerks and Operators 1,320 80 130 190 19.4 260 854 2,174
General
Drivers, Guards and Unskilled Workers 700 30 60 150 205 228 673 1,373
Total 4,600 465 702 974 J,193 1,516 4,850 9,450
April 21, 1976
ANNE 24Page 1 of 2 pages
SYRIA
SYRIAN TELECOMMUNICATIONS ESTABLISHMENT (STE)
Summary of Basic Tariffs(As of January 1976)
I. Telephone Rates Exchanges with Full-Time ServiceAutomatic mnualI(LS) (LS7
A. Deposits 200 150
B. Installation Charges1. Direct exchange connection 500 300-4002. Internal extension 15 153. External extension within
exchange area 200 100
C. Rentals - Annually1. Direct exchange line 120 722. Internal extension 36 243. External extension 84 60
D. Local CallsEach call in excess of 1,000 no
free calls 0.10 charge
E. Long Distance CallsLong distance calls via the operator are charged on the basis of athree-minute call, the charge varying according to distance andtime. STD calls are charged by time units expressing STD time inseconds per unit fee of LS 0.10, and likewise by distance. Somerepresentative examples are given below:
Approx. Charge for a 3-minute call*Km Locations STD Manual
(LS) (LS)68 Darta - Swieda 0.60 0.40101 Damascus - Darla 0.90 0.70146 Aleppo - Homs 1.50 1.60348 Damascus - Latakia 2.10 2.05355 Damascus - Aleppo 2.70 3.00461 Swieda - Aleppo 2.70 3.20950 Damascus - Kamishly 3.30 3.70
*Night rates (20:00 - 06:00) double length of call per unit rate for STM callsor cut in half the rates of manual calls.
ANNEX 24Page 2 of 2 pages
II. Telegraph (LS)
Ordinary private telegram per word 0.15Urgent private telegram per word 0.30Ordinary press telegram per word 0.05Urgent press telegram per word 0.15Minimum charge of 10 words per telegram 1.50
III. Telex
1. Deposits, Installation Charges and Rentals
Type of Equipment Deposit Installation Charge Annual Rental
Ordinary teleprinterwith control unit 2,000 10,000 2,600
Supplementary ordinaryteleprinter 1,500 8,500 2,400
Reperforator unit 200 200 300
2. Call Charges
Minimum charges for calls per annum is LS 1,500.Domestic calls up to 15() Km - LS 0.20 per minute.Domestic calls beyond 150 Km - LS 0.40 per minute.
IV. International Services
Telephone Charge Telex ChargeCountry Per 3 minutes per 3 minutes
(LS) (LS)
Fgypt 12.48 22.04France 38.40 32.40Greece 14.08 32.40Germany (Fed. Rep.) 37.94 32.40Iran 48.oo 58.77Italy 37.60 32..40Japan 72.00 73.46Pakistan 33.60 58.77Sudan 28.21 58.77Tunisia 32.00 40.80U.K. 39.88 32.40U.S.A. 4o.6o 58.77U*S.S.R. 38.40 44.o8
January 19, 1976
SYRIA
SYRIAN TELECOMMUNICATIONS ESTABLISHMENT (STE)
Income Statements
(LS Thousands)
Adjusted Actuals ForecastYear ending December 31: 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980
Operating Revenue
Telephone-Installation Charges 2,528 3,113 3,872 4,258 3,958 4,450 11,430 16,930 19,690 45,650 60,400-Rentals 10,166 10,606 11,024 10,770 16,334 16,375 17,724 20,890 24,971 32,254 43,987-Local Calls 6,610 6,524 6,320 5,871 9,918 11,135 12,890 15,240 16,260 18,280 23,220-Trunk Calls 5,175 4,826 5,075 5,412 7,520 8,900 10,680 13,880 20,820 27,070 32,480-International Calls 1,760 1,960 2,731 3,381 9,572 9,800 11,270 12,960 16,850 20,220 24,260-Total 26,239 27,029 29,022 29,692 47,302 50,660 63,994 79,900 98,591 143,474 184,347-Revenues from Rate Change - - - - - - 6,399 31,960 39,436 57,390 73,739-Total Telephone Revenues 26,239 27,029 29,022 29,692 47,302 50,660 70,393 111,860 138,027 200,864 258,o86Telegraph 4,381 4,488 5,655 8,658 10,372 11,410 11,310 11,090 10,870 10,590 10,225Telex 67 287 402 1,121 1,425 2,895 3,695 5,650 6,905 9,510 12,660Miscellaneous 2,411 3,052 2,521 1,952 2,897 2,135 2,480 2,900 3,420 4,275 6,110
Total Operating Revenues 33,098 34,856 37,600 41,423 61,996 67,100 87,878 131,500 159,222 225,599 287,081
Operating Expenses
Staff Cost 8,357 9,722 9,300 11,568 13,742 17,675 21,210 26,510 33,140 41,425 51,780Operating & Maintenance 7,984 6,788 9,797 10,948 12,027 13,900 15,845 18,220 20,950 26,815 38,345Depreciation 4,568 5,106 5,786 6,155 8,543 11,930 16,044 23,567 35,098 49,010 62,124Miscellaneous Expenses 846 1,469 2,032 1,107 873 950 1,100 1,320 1,585 2,155 2,910Total Operating Expenses 21,755 23,085 26,915 29,778 35,185 44,455 54,199 69,617 90,773 119,405 155,159
Operating Income 11,343 11,771 10,685 11,645 26,811 22,645 33,679 61,883 68,449 106,194 131,922Net Other Income (1,847) (800) (1,416) (2,258) (6,424) (1,500) - - - - -Net Income Before Interest 9,496 10,971 9,269 9,387 20,387 21,145 33,679 61,883 68,449 106,194 131,922Less: Interest 358 194 123 1,108 684 567 2,793 5,819 17,808 23,356 24,675
Net Profit 9,138 10,777 9,146 8,279 19,703 20,578 30,886 56,064 50,641 82,838 107,247
Average Net Plant 64,092 70,249 80,135 95,916 110,666 133,174 201,477 332,128 533,407 769,598 976,319
Rate of Return (%) 17.7 16.8 13.3 12.1 24.2 17.0 16.7 18.6 12.8 13.8 13.5
Operating Ratio (%) 66 66 72 72 57 66 62 53 57 53 54
April 24, 1976
ANNEX 26Page 1 of 5 pages
SDRIA
SYRIAN TELECOMMUNICATIONS ESTABLISHKENT (STE)
Notes and Assumptions on Financial Statements
A. Income Statements (Annex 25)
Background
1. The former Postal and Telecommunications Establishment's incomestatements showed the results of t]heir postal and telecommunications opera-tions as a whole. On the basis of its account code which allows fairlywell for the separation of the above operations, income statements for theperiod 1970-74 have been adjusted to show the results of the telecommunica-tions operations only. However, to allow for a link to the balance sheetsfor that period, the annual deficit of the postal operations has beenincluded in the statements under the heading "Net Other Income."
2. The forecast of revenues is based on STE's existing tariffs.However, as from 1976, additional telephone revenues which would resultfrom STE's overall increas of their tariffs by about 40%, are separatelyshown under the heading "Revenues From Rate Changes."
Telephone Revenues
3. Installation charges were forecast to reflect the planned averageincrease in connections.
4. Rentals were forecast on the basis of the annual average of con-nected subscribers.
5. Local call charges apply to automatic subscribers only and repre-sent charges for calls in excess of the 1,000 free calls each subscriber isentitled to make under the present tariff. Revenues were projected on theassumption that the annual revenues from excess calls per subscriber wouldgradually drop from about LS 100 in 1975, 1976 and 1977 to about LS 70 in1980, thus reflecting the increasing access of the subscribers to the longdistance network.
6. Trunk calls are forecast to produce revenues at the historicalannual growth rate of 20% during 1975 and 1976. In line with the gradualexpansion of the network and the completion of the major long distancefacilities, the annual growth rate is expected to arrive at 50% in 1978due to an impulse jump caused by the substantial increase in the STD service.Thereafter it would gradually decline and reach the historical level of 20%in 1980.
7. International calls would generate revenues at the historicalannual growth rate of 15% during 1L975-77. In 1978 when the satellite earthstation would be in full operation, the growth rate would increase to 30%.Thereafter revenues are assumed to annually increase by 20%.
ARNEM 26Page 2 of 5 pages
8. Telegraph revenues are assumed to annually decrease by 2%, thusreflecting the increasing availability of telephone and telex services.
9. Telex revenues were forecast to annually reflect the expectedaverage number of telex subscribers and the increase in traffic.
10. Miscellaneous revenues are assumed to annually increase in accord-ance with the average growth of DELs.
Expenses
11. Staff cost was assumed to increase by 20% in 1975 to provide forhigher salaries and pension payments. Thereafter staff cost was assumed toannually increase by 25%.
12. Operating and maintenance expenses were forecast to annuallyincrease by 2 percentage points below the average growth of DELs, thusasuaming that future operations would provide for cost reductions due toeconomies of scale.
13. Depreciation was forecast at an annual c,oaposite rate of 5%.
14. Miscellaneous expenses were forecast to annually increase inaccordance with the average growth of DELs.
B. Balance Sheets (Annex 27)
Background
1. While the former Posts and Telecommunications Establishment'saccounts code would allow for showing separately the financial position ofthe Establishment's postal and telecommunications branches, the annualbalance sheets so far account for the financial position of these branchesas a whole. For the purpose of this report, the actuals shown in the bal-ance sheets for the period 1970-74 have been adjusted to show the financialposition of the telecommunications branch only. The adjustments are neces-sarily of a tentative nature and could include some inaccuracies which,however, would not substantially impair the presentation of the past finan-cial position of the telecomiunications branch.
Plant in Service
2. Values of total plant additions for the years 1975 through 1980are based on STE's program. The depreciation reserve was computed for eachyear's addition based on a 5% straightline depreciation rate.
Work in Progress
3. The values for plant under construction pertaining to the Rank-assisted project were assumed to equal 40% of the annual capital construc-tion plus the balance of works brought forward from previous years.
ANNEX 26Page 3 of 5 pages
Cash and Bank
4. Forecast cash balances are derived from the Sources and Applica-tions of Funds statement and are assumed to amount to two ronths' cash oper-ating expenses.
Accounts Receivable
5. Due to the reorganization of the billing process in 1975, accountsreceivable were forecast to annually equal about three months' billings in1976 and thereafter would gradually decrease to two months' billings in 1980.
Inventories
6. Present inventories are too high and the forecasts assumed thatinventories would gradually decline from the present LS 241 per subscriberto LS 148 per subscriber in 1980.
Prepayments
7. Prepayments for the years 1975 through 1977 represent payments tobe made to suppliers on the signing of contracts. Prepayments for the years1978 through 1980 were assumed to annually amount to LS 9 million.
Equity
8. STE's opening balance sheet has not yet been established. Theforecasts, therefore, assume that its future capitalization would be on thepattern of the former Posts and 'Telecommunications Establishment (PTE) whereequity consisted of capital, reserves and surplus of the year.
9. For the years 1975 through 1977 STE was assumed to retain thestatutory capital of the former IPTE which almost entirely represents previ-ous investment by Government for PTE's telecommunications branch. STE'sfull statutory capital of LS 300 million was assumed to be fully paid upfrom accumulated reserves in 1978.
Subscribers' Deposits
10. These are non-interest bearing and made by each new subscriberwhen applying for service. They are refundable upon disconnection ofservice. The annual total of the deposits is the sum of deposits at theend of the preceding year plus desposits collected during the current year.
Long-Term Debt
11. STE's long-term debt as of December 31, 1974, amounted to LS 6.3million, consisting of small outstanding medium-term supplier credits. Asummary showing major supplier credits secured in the past and major sup-plier credits and loans to be obtained during the program period, is givenbelow.
ANNEX 26Page 4 of 5 pages
9cpplier Countryand/or
Item Supplier Contract and Dbte Value Terms of Payment
1 'iest Germany 80,000 LU - 1965 LS 21.5 million 35% cash on signing; 65% by five annualSiemens promissory notes until 1977; 5% interest.
2 France Telex Equipment-1969 F 3.6 million 35% cash on signing; 65% by 9 half-yearlyO',IT-ALGATEL (LS 3.0 million) instailmnts starting 1976; 5.5% interest.
3 l[banon Damascus-Beirut- LS 11 .0 million LS 2.0 million in cash on signing; balance30DOTEL Alexandria Cables payable in 5 annual installments through 1977;
1972 5.5% interest.
4 France Coaxial Cables-$973 Share of STE 20% cash on signing; 80% by 7 half-yearly(Joint Project) F 50.0 million installments during 1975-78; 6.5% interest.
(LS 42.2 million)
5 1West Germany 100,000 LU - 1975 LS 60.0 million 10% cash on signing; 40% in 1976, 35% inSiemens 1977, 15% in 1978.
6 France 29,000 LU (ELectronic) F 70.0 million 10% cash on signing; 10% on shipping docu-CIT 1975 (LS 59.0 million) ments; 80% by 16 half-yearly promissory notes
at 7.2% interest. (1st P/note 4 years aftercontract.)
7 France Earth Station -1975 LS 30.0 million 15% on signing; 25% on shipping documents;I'ELSPACE 25% on arrival at site; 30% after installa-
tion; 5% retention. Government funding.
8 IBRD 1976 US$20,0 million 8½% interest and a term of 20 years includ-ing a grace period of 4 years.
9 France International 3witch- US$4.5 million 5% on signing; 10% on shipping documents;CIT ing Center - 1975 (LS 16.7 million) balance by 10 half-yearly promissory notes
payable 1977-82 at 7.5% interest.
10 France Palmyra-Baghdad LS 10.0 million Terms same as under Item No. 4.Coaxial Cable.Not yet placed.
11 France, UK or Submarine Cable LS 36.0 million Terms are 10% on signing; 10% against shippingJapan Tartous-Alexandria. documents; 80% in half-yearly installments,
Not yet placed. first payment due after 18 months after con-tract.
12 Efance, UK or Submarine Cable LS 47.0 million Terms as under 11 above.Japan Tartous-Crete (Europe).
Not yet placed.
13 France Extension of existing LS 6.0 million Terms same as under Item No. 4 above.coaxial cable network.Not yet placed.
1 France Syria-Lebanon coaxial LS 6.0 million Terms same as under Item No. [; for LS 5.0cables and microwave million for coaxial cable equipment and cashequipment expansion. for LS 1.0 million for microwave.Not yet placed.
15 Arab regional satellite LS 21.0 million Arab fund financing likely.system. Not yet placed.
16 International IRIJ - Not yet placed. LS 27.0 million Not yet negotiated.Cable Companies
17 France Extension of the Inter- LS 5.0 million Terms as under Item No. 9 likely.CIr national 3.itching
Center. Not yet placed.
18 France Telex extension. LS 7.0 millionNot yet placed.
19 West Germany or 200,000 LU. IS 355 million Likely terms: 20 years including graceJapan Not yet placed. period of 5 years; 2½% interest.
ANNEX 26Page 5 of 5 pages
Current Liabilities
12. Current liabilities include social contributions, short-term creditsand other payables. Social contributions were forecast to annually increasein line with staff cost. Short-term credits were assumed to annually increasein accordance with the value of stocks and stores. Other payables were fore-cast on the basis of the annual growth of DELs.
April 2h, 1976
SYRIA
SYRIAN TELECOMM NICATIONS ESTABLISNNENT (STE)
Balance Sheets
(LS Thousands)
Adjusted Actuals Forecast
Year ending December 31: 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980
AssetsFixed Assets
Gross Plant in Service 132,010 145,487 162,948 196,778 214,831 262,360 379,412 563,272 840,636 1,119,762 1,365,212Less: Depreciation Reserve 65,909 71,091 77,074 90,821 99,457 111,387 127,431 150,998 186,o96 235,106 297,230
Net Plant in Service 66,101 74,396 85,874 105,957 115,374 150,973 251,981 412,274 654,54o 884,656 1,067,982Plant under Construction 47,771 44,562 49,103 32,530 29,965 31,686 78,034 122,574 184,910 186,084 163,634
Total Fixed Assets 113,872 118,958 134,977 138,487 145,339 182,659 330,015 534,848 839,450 1,070,740 1,231,616Other Assets 26,326 24,412 15,273 10,484 6,502 - - - - - -
Current AssetsCash and Bank 2,988 4,319 4,329 9,429 12,154 5,079 6,358 7,676 9,280 11,732 15,506Accounts Receivables 8,455 11,487 12,445 12,567 16,370 18,027 19,683 22,293 27,562 31,214 42,238Inventories 25,012 34,032 32,091 31,121 29,758 30,006 31,951 34,410 36,745 41,541 52,496Prepayments 11,034 8,069 9,057 6,509 11,661 15,972 9,400 7,200 9,000 9,000 9,000Other Debtors 1,526 2,194 2,470 3,500 3,103 3,320 3,851 4,506 5,317 6,646 9,503
Total Current Assets 49,015 60,101 60,392 63,126 73,046 72,404 71,243 76,085 87,904 100,133 128,743Deferred Charges 19,451 20,570 13,982 13,239 3,745 7 - - -
Total Assets 208,664 224,041 224,624 225,336 228,632 255,063 401,258 610,933 927,354 1,170,873 1,360,359
Liabilities
mquityCapital 79,316 79,316 79,316 79,316 79,316 79,316 79,316 79,316 300,000 300,000 300,000Reserves 60,161 69,389 80,167 81,878 9o,158 113,216 179,129 211,685 122,706 216,704 300,756Surplus of the Year 9,138 10,777 9,146 8,279 19,703 20,578 30,886 56,o64 5o,64i 82,838 107,247
Total Equity 148,615 159,482 168,629 169,473 189,177 213,110 289,331 347,065 473,347 600,54? 708,003Deposits 6,294 6,894 7,668 8,424 9,182 10,727 14,727 20,727 27,527 43,127 63,727
Long-Term DebtSupplier Credits 17,986 14,839 17,581 13,301 6,328 9,822 34,o64 63,630 96,457 87,327 78,256Proposed Supplier Credits - - - - - 500 20,040 74,560 98,770 101,060 86,996Proposed Bilateral Loan - - - - - - - 31,000 108,ooo 201,0oo 278,000Proposed IBRD Loan - - - - - - 19,980 48,lo 94,.50 103,60o 100,233
Total Long-Term Debt 17,986 14,839 17,581 13,301 6,328 10,322 74,0/4 217,290 397,577 492,987 543,485
Current LiabilitiesSocial Contributions 1,374 2,423 1,604 2,249 2,149 2,772 3,326 3,991 4,789 5,986 7,782Creditors 4,141 9,107 6,279 7,770 12,959 13,066 13,913 14,984 16,ooo 18,o88 22,858Other Payables 6,980 10,499 6,696 10,429 4,735 5,066 5,877 6,876 8,114 10,143 14,504
Total Current Liabilit.ies 12,495 22,029 14,579 20,448 19,843 20,904 23,116 25,851 28,903 34,217 45,144
Deferred Income 23,274 23,310 16,167 13,690 4,102 - - - - - -
Total Liabilities 208,664 224,041 224,624 225,336 228,632 255,063 401,258 610,933 927,354 1,170,873 1,360,359
Debt/Equity Ratio 11/89 9/91 9/91 7/93 3/97 5/95 20/80 39/61 46/54 45/55 43/57
Current Ratio 2.1 2.7 3.7 3.1 3.7 3.5 3.1 2.9 3.0 2.9 2.9
April 24, 1976
ANNEX 20
SYRIA
SYRIAN TELECOMMUNICATIONS ESTABLISHMENT (STE)
Statement of Sources and Applications of Funds
(LS Thousands)
AdjustedActuals Forecast Total
Year ending December 31: 1974 1975 1976 1977 1970 1979 19o0 17W-I7m
Sources of Funds
Internal Cash GenerationNet Income Before Interest 20,387 22,645 33,679 61,883 68,449 106,194 131,922 164,011Depreciation 8,543 11,930 16,044 23,567 35,098 49k010 62,124 74,709
Total Internal Cash Generation 28,930 34,575 49,723 5,450 103,547 155,204 l 238,720
Deposits 758 1,545 4,000 6,ooo 6,800 15,600 20,600 16,800
Borrowings-Supplier Credits - 7,600 29,400 34,800 42,100 - - 106,300-Proposed Supplier Credits - 500 19,900 55,600 31,600 14,000 - 107,100-Proposed Bilateral Loan - - - 31, 000 77,D30 93,000 77,ooo 108,ooo-Proposed IBRD Loan - - 19,980 28,120 46,250 9,250 94,350
Total Borrowings - 8,100 692 149,520 196,9so 116,250 77,000 415,750
Government Contribution - 1,498 58,696 1,670 75,641 44,357 214 136,007
Total Sources of Funds 29,688 45,718 181,699 242,640 382,938 331,411 291,860 807, 277
Application of FundsCapital Construction
Proposed IBRD Assisted Project - - 161,600 167,400 209,700 - - 538,700Balance of STE's Program - - 1,800 25. 000 17,000 151,300 121,000 43, 800STE's Special Project/ - - - 36,ooo 113r000 129,000 102,000 149,000Total Capital Construction 15,488 4,250 00 2 00 339,700 280,300 223,00o 73, 500
Debt Service-Interest
Supplier Credits 684 567 1,242 1,853 4,718 4,o47 3,365Proposed Supplier Credits - - - 176 5,o68 7,011 6,529Proposed Bilateral Loan - - - 375 1, 725 3, 850 5, 975Proposed IBRD Loan - - 1, 551 3, 415 6, 297 8, 448 8,806Proposed Government Loan - - - - - - -
Total Interest 684 567 2,793 5,819 17,808 23,356 27675 26 420
Debt Service-AmortizationSupplier Credits 6,973 4,106 5,158 5,234 9,273 9,130 9,071Proposed Supplier Credits - - 360 1,080 7,390 11,710 14,064Proposed Bilateral Loar - - - -- - -
Proposed IBED Loan - - - - - _ 3 367Proposed Government Loan - - - - _ _ _
Total Amortization 6,973 4,106 5,518 6,314 16,663 20,840 26,502 28,495
Total Debt Service 7,657 4,673 8,311 12,133 34,471 44,196 51,177 54,915
Investment (3,982) (6,502) - - - - -
Variation in Working Capital 7,800 5,372 8,709 789 7,163 4,463 13,909 16,661other than cash
Total Application of Funds 26,963 52,793 180,420 241,322 381,334 328,959 288,Q86 803,076
Cash Surplus (Deficit) 2,725 (7,075) 1,279 1,318 1,604 2,452 3,774 4,201Cash at Beginning of Year 9,429 12,154 5,079 6,358 7,676 9,280 11,732 5,079Cash at End of Year 12,154 5,079 6,358 7,676 9,280 11,732 15,506 9,280Debt Service Coverage 3.8 7.4 6.o 7.0 3.0 3.5 3.8
I 200,000 additional lines.
April 24, 1976
SYRIA
SYRIAN TELECBHMUNICATIONS ESTABLISHMENT (STE)
Performance Indicators
Year ending December 31: 1970 1971 1972 1973 1974 1975 1970 1977 1978 1979 1980
No. of Direct bEchangeLines (DELs) 80,000 88,000 99,000 109,000 116,587 132,425 153,425 184,425 219,900 298,900 402,900
Revenue per DEL (LS) 328 307 293 272 406 383 459 607 628 672 641
Revenue per DEL (US$) 89 83 79 74 110 104 124 164 170 182 173
Operating Ratio (%) 66 66 72 72 57 66 62 53 57 53 54
Rate of Return (%) 17.7 16.8 13.3 12.1 24.2 17.0 16.7 18.6 12.8 13.8 13.5
Project Period
April 23, 1976
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