A Third GSM Operator for Syria

As the country's GSM boom continues, Syria could have a third cellular operator by 2008. Syria's GSM subscribers grew at a massive CAGR of 210 % between 2000 and 2004, reaching a penetration rate of 13.8% by end of 2004. Much room remains for growth and the Arab Advisors Group expects the penetration rate to triple to 46% in the coming 5 years.

The fixed line market and international communications in Syria remain under a strict monopoly of the Syrian Telecommunication Establishment (STE). The STE is currently the sole provider for infrastructure and is responsible for all types of telecommunications. However, there is a direction towards having multiple entities providing telecommunication services, and the contribution of the private sector in value added services such as payphones. The STE can also contract other parties to provide some telecommunication services for its benefit.

Barring a major change in policy, the STE is expected to sustain its monopoly till 2010, when full liberalization of the telecom market is expected to happen. Syria is a signatory to the European partnership agreement, which obligates market liberalization six years after signing the agreement. This means a form of competition in the fixed, mobile, Internet and Datacomm markets.

"The two private mobile operators in Syria have revenue sharing agreements with the STE. The GSM build-operate-transfer (BOT) method used by the STE was a way to allow foreign private investments in the telecom sector without relinquishing the control of the public sector. Companies that are permitted to operate in the telecom sector are subject to the provisions of Investment Law No. 10. Through the BOT agreements, both GSM operators are allowed to operate for up to 15 years." Serene Zawaydeh, Arab Advisors Senior Research Analyst wrote in the report. "According to the BOT agreements, the STE has the right to introduce a third GSM operator after seven years if the STE so wishes. A third operator could enter the market in 2008, as per the ministry's strategy. It could be the STE itself or a third private cellular operator should the government policy decide so." Ms. Zawaydeh added."

Posted to the site on 27th April 2005