Lebanon’s mobile privatisation set for February

10 Oct 2007

The presidents of Lebanon’s Higher Privatisation Council (HPC) and the fledgling Telecommunications Regulatory Authority (TRA) told local newspaper The Daily Star yesterday that the auction of the country’s two mobile network operators has been scheduled for February 2008. Bidders will be allowed to buy two-thirds stakes in each of the cellular licensees, currently managed by Kuwait’s MTC (MTC Touch) and Germany’s DeTeCon (Alfa), while the government will retain a third of the shares. The government will then launch an initial public offering (IPO) of a portion of its remaining shares in each company on the Beirut Stock Exchange. Interested parties will be able to study market information and application conditions to be published by the TRA and HPC in ‘a couple of weeks’, and will be expected to present technical bids in January, with final bids due in February. TRA president Kamah Shehadi told the paper that the auction would be the most transparent and competitive in Lebanon’s history. ‘The entire auction process will be broadcast live and in the presence of the press in order to show that we have nothing to hide,’ Shehadi said, adding that ‘between seven and eight’ companies had expressed an interest in bidding for a 20-year licence. In an attempt to ensure high quality of services, the TRA has ruled that at least a 15% stake in each licensee must be held by experienced mobile network operators, which must also take management roles in the new companies. MTC Touch and Alfa’s build-transfer-operate (BTO) contracts with the state expire in May and June 2008 respectively, but HPC president Ziad Hayek said: ‘We have to give the two companies six-month notices before the expiry of the contracts.’

Under a five-year plan published in January, the government aimed to privatise the mobile sector in the third quarter of this year, but the spate of assassinations and heightened political tensions in the country delayed the process. Hayek told the Star: ‘This government is setting the process in motion so that the next Cabinet that will be formed after the election of the president can continue the work of the previous government.’ He stressed that the current government is not qualifying any participant and not taking any decision on the auction. ‘Everything will be done through the new government and the new president of the republic,’ Hayek said.

At present, DeTeCon (Alfa) and MTC (Touch) charge the government USD4.2 million and USD4.25 million a month respectively to run the two GSM networks. Lebanon’s 1.2 million mobile users are split roughly equally between the two operators, generating around USD750 million in net annual revenues for the government. Telecoms Minister Marwan Hamadeh has said that the government hopes to fetch between USD5 billion and USD6 billion from the mobile network sale, which has been earmarked solely for reducing public debts of over USD41 billion.