Palestinian Authority sells mobile stake to pay wages

11 Feb 2004

The Palestine Commercial Services Company, part of the Palestinian Authority, has sold its stake in local GSM operator Palestine Cellular Telecommunications Company (Jawwal) in order to help pay the wages of its employees. According to the Al Hayat Al Jadida newspaper, the stake was sold to national PTO Paltel for USD42 million, which now has full control of Jawwal. Commenting on the deal, the country’s communications minister Azzam Al Ahmed said ‘The transaction was carried out because of the financial difficulties of the authority, and if it had not been done we would not have been able to pay the salaries of our employees last month’.

Palestine’s only mobile operator since it launched in August 1999, Jawwal was initially created as the mobile arm of Paltel but in April 2001 was spun off to create an independent company with a paid up capital of USD35.21 million. Jawwal was given a new corporate structure with its own financing, marketing, engineering and customer service divisions. Its GSM network was supplied by Ericsson under the terms of a USD40 million contract signed in October 1999, while exchanges were provided by Alcatel. In May 2001 Jawwal awarded the Swedish vendor a USD12 million contract for the second phase of its network rollout. Jawwal had hoped that phase two of its network expansion would enable it to sign up 200,000 customers by the end of 2001 and 450,000 twelve months after that. It almost reached its first target, with a subscriber base of 195,150, but added just 55,547 customers the following year, leaving it well short of its end-2002 goal. The cellco attributes slow growth to its well-documented legal battle with Israel and the difficulties of operating in what is essentially a war zone.