Lebanon Delays Mobile Network Privatisation - Again

Lebanon's government has again decided to delay the oft-delayed privatisation of the country's two state owned mobile phone networks. The government recently announced plans to double the carrying capacity of the networks, and had said it was in talks to extend the existing operating arrangements, so the delay is not a huge surprise.

The sale is now not expected until after the next elections which are not due until May 2009.

The two networks are owned by the government, but operated by MTC Touch and Alfa on its behalf. They are tightly regulated and unable to expand their services without government permission and as a result the two networks are straining under their traffic load with a huge number of potential customers waiting for a connection. The Mobile World notes that the two operators have some 1.28 million customers between them, representing a population penetration level of 32%.

"It does not change anything in what we said before. There is still one item missing which is the political decision by the Council of Ministers to proceed with the sale," chairman and chief executive officer of the regulator, Kamal Shehadi told the Middle East Economic Digest (MEED)

Lebanon's two operators were originally set up under a 10-year Build-Operate-Transfer (BOT) agreement, back in June 2001, the government controversially cancelled the BOT licenses held by LibanCell and Cellis which were not due to expire until 2004. The government then invited bidders to manage the networks on its behalf, and the concession was eventually awarded to Zain and Alfa.

A plan to sell the networks for around US$3 billion each has been on and off for well over a year.

Lebanon's Telecommunication Minister, Jebran Bassil recently announced that mobile tariffs - reported to be some of the highest in the world - would be reduced. He said that the high call costs are an effective tax on consumers and the government shouldn't be relying so heavily on them in the future. The government earns on average US$1.3 billion a year from the phone networks - equivalent to some 27% of its total tax income.

On the web: Middle East Economic Digest - Mobile World

Posted to the site on 18th December 2008