WHAT DO WE EXPECT FROM THE LIBERALIZATION OR THE PRIVATIZATION OF LIBAN TELECOM?

The Message of the Chairman of the Telecommunications Regulatory Authority (TRA) that can be accessed on the Internet at http://www.tra.org starts with these words: “The establishment of the Telecommunications Regulatory Authority (TRA) has begun with the appointment of the Board of Commissioners in February 2007. The TRA is a significant milestone signaling the start of the liberalization and restructuring of the Lebanese telecommunications sector, a process scheduled to take up to eight months that should be completed by the end of October 2007.”

The web site, on the whole, is very instructive and full of precious information, though some technical subjects may be sometimes hard to understand.

In the same message the Chairman also mentions that he intends, “on this website, to consult the public and stakeholders on matters related to telecommunications policy, regulations, and key decisions. “

We wish to avail ourselves of this gracious invitation and we would like to ask the Chairman to provide us with some information regarding the projected Telecom privatization process and its outcome.

Though we have read with interest about all the advantages of privatization, we notice that no specific projected values were included.We know, from the yearly reports of the Ministry of Finance, that during the period from 2004 to 2006, the revenue from the Telecom operations have been respectively, 1,310, 1456 and 1,298 billions of Lebanese pounds. These spectacular results have incited the President of the Chamber of Deputies to dub the Telecom revenues, the “black gold” of Lebanon.

Our natural reaction is to wonder if, after privatization, the same rate of returns will accrue to the State. Another concern of the citizens is about the amount of the compensation that the State expects to receive from the privatization process. Nowhere, in the TRA’s report, or in the Paris III Reform Program, is any specific figure mentioned in this respect.

Though, one naturally understands the need for confidentiality, at this stage of the tender process, the citizens are nevertheless anxious to be given some indication of the amount that their government expects to collect ultimately from the Telecom privatization process. They realize that this compensation will serve to pay up a portion of the National Debt and will, therefore, have a significant impact on the macroeconomic projections of the next five years (see our separate study on the subject of the National Debt at http://www.e4debtservice.blogspot.com.)

It is necessary to point out, at this stage, that there are widely conflicting opinions about the market value of Liban Telecom. Figures varying from two billion US dollars to as much as twenty billion US dollars are circulating among some economic circles. Other sources contend that, even if the higher price was obtainable, it might not be in the interest of the Lebanese Government to sell, at the present time.

In the interest of better transparency and accessibility, as called for by the Chairman of TRA, we believe that some simple statements should be published in the abovementioned web site of the Telecommunications Regulatory Authority.These statements should include the contemplated proceeds of the liberalization of the mobile services, the broadband services and the international gateway, and the yearly State Revenues from this sector that are projected for the years following privatization.