Privatisation of Lebanon Telecom delayed by political instability

Lebanon Delays GSM Network Privatisation
Lebanon's government has delayed the planned privatisation of the country's two GSM network operators until the beginning of May. The sale was due to have been carried out at the end of next month - and raise upwards of US$6 billion for the government. The sale will be for two-thirds of the networks, with one third retained by the government, which will then be floated on the Beirut Stock Exchange.
"The government decided to delay the auction for few months to determine if a broader cabinet will be formed," Ziad Hayek, the president of the Higher Privatization Council, told The Daily Star newspaper.
Opponents of the privatisation claim that the sale would deprive the government of US$1 billion per year in revenues from the networks - while supporters note the high tariffs charged to customers and lack of competition in the market is holding back the overall economy.
Hayek stressed that none of the companies which shown interest in the auction pulled out.
A source close to the process told The Daily Star that most companies will be reluctant to pay billions of dollars for mobile licenses if there is no political consensus on the issue.
"Some of the companies will think twice before making any commitment in Lebanon. They naturally want guarantees that any transaction in the future will not be blocked by the opposition," the source said.
The two operators have roughly equal market shares as they are tightly regulated by the government. The Mobile World notes that the two operators have some 1.2 million customers between them, representing a population penetration level of 30%

COMMENTS BY CPI
It appears that the stakes have been raised. The proceeds from the sale of two thirds of the mobile network are now expected to reach $6 billion. This means that the entire mobile network is now estimated at $9 billion. The question is:

• Is it worthwhile to give away a revenue of $600,000,000 a year for a lump sum of $6 billion?
• Furthermore, would it not be preferable to increase the network's penetration and win over fifty per cent more customers instead of selling the network?

All these questions deserve to be studied and openly discussed with the citizens before the Administration, takes a decision one way or the other.
This has nothing to do with the Loyalists and the Opposition. It is simply a matter of transparency.

27 December 2007
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» Chart Data announced on Wednesday that it would bid for a stake in one of two Lebanese mobile phone firms as part of the former monopoly operator's plans to expand in the Middle East and Asia. But despite the apparent interest in Lebanon's telecom sector, many local NGOs and consumer groups voiced reservations about the bidding process.
In a statement to the press, Consumer Lebanon, the Industrial Association and the General Labor Confederation said that the privatization of the two cellular networks is not entirely a technical matter but a political and economic one as well.
It said any privatization in Lebanon should first enjoy a full political consensus, warning that past experiences showed that all privatization efforts failed miserably due to lack of transparency and accountability.
The statement criticized the Telecommunication MinistryTelecommunication Ministry, which is trying to sell the telecom sector without the consent or advice of the Telecom Regulatory Authority (TRA).
There have been unconfirmed reports about sharp differences between the head of TRA Kamal Shehadi and the head of government-controlled OGEROOGERO Abdel-Munim Youssif over the rules and regulations governing Lebanon's telecom sector.
The statement called on the TRA to take full control of the bidding process.
It stressed that the privatization of the cellular networks will not yield the desired results because the number of actual subscribers is very low compared to other countries in the region.
"Before selling the telecom sector, the authorities must first reduce the rates, end the financial embezzlement in this sector and modernize and upgrade the networks before it crumbles," the statement said.
Lebanon expects to sell majority stakes in AlfaAlfa and MTC TouchMTC Touch in February and offer the rest to the public to raise as much as $7 billion, the country's telecommunications minister said in October.
"We will bid," said Adel al-Mutawa, QtelQtel's executive director for group communications. When asked for which company QtelQtel would bid, Mutawa said, "We are still evaluating."
"We're looking at any opportunities for expansion in [the Middle East and North Africa] and Asia and Lebanon is going to be the first potential market in the region," he said, declining to give more details.
Emirates Telecommunications Corp. (Etisalat)Emirates Telecommunications Corp. (Etisalat) had said on Monday it was considering a bid to take over one of the firms.
Lebanon wants to use the funds to pay off huge public debts of about $41 billion, or 180 percent of GDP, Telecommunications Minister Marwan Hamadeh said in October.
Any winning bid would have to get final approval from the country's president, he has said.
Lebanon's ruling coalition and the Hizbullah-led opposition have been locked in a power-sharing dispute, virtually paralyzing the country.
"Political stability has a very important role in the [bidding] process," Mutawa said.
QtelQtel Chief Executive Nasser Marafih told Reuters this month the firm planned more acquisitions after its $3.72 billion purchase of Kuwaiti operator National Mobile Telecommunications Co. (Wataniya)National Mobile Telecommunications Co. (Wataniya) in March.
It was mulling sales of shares in Qatar, depositary receipts in London or bonds as funding options, he said.
The firm, which operates in 16 markets, lost its telecom monopoly this month after the oil and gas producer awarded a group led by Vodafone Group Plc a second mobile phone license.
Shares of QtelQtel, which makes 76 percent of its profit in Qatar, fell 1.05 percent on Wednesday.
At present, MTC TouchMTC Touch and AlfaAlfa are running the one million line cellular networks on behalf of the government.
But informed sources expressed doubt that the government will be able to auction the networks in February if the political situation did not improve.
"Investors will not risk their money and spend billions of dollars for licenses if the next government decided to challenge the bidding process and call for a new privatization law," one source said. - The Daily Star, with agencies

L'opinion de Hezbollah sur la privatisation de Liban Telecom

Hezbolla estime que la privatisation de 40% des lignes fixes et 60% des cellulaires devrait rapporter de $8 a $9 milliards de dollars