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French Version

Plans for telecom sale move ahead

Despite this summer's destruction in Lebanon, the government is still hoping to negotiate a good price when it privatizes the mobile telecom sector in less than nine months, a senior official said on Friday.

"The war has delayed the privatization program but not derailed it and we are still receiving inquiries from Arab investors," Ziad Hayek, the secretary general of the Higher Privatization Council, told The Daily Star.

Privatization was a key element of Prime Minister Fouad Siniora's agenda before war broke out in July 12.

Revenues from privatization are to be used to reduce the public debt, which is expected to reach $41 billion by the end of 2006.

But most importantly, economists say that privatization of the telecom sector will boost investments and create jobs.

The government was hoping to sell two mobile licenses this year after management contracts with the current operators, Mobile Telecom Company and Alfa - which is part of a German group - are revoked.

"We have appointed international consultancy firm Booze Allen Hamilton to help us establish Liban Telecom and merge the state-owned Ogero Company with two other directorates at the Telecommunication Ministry," Hayek said.

He said that the first priority of the higher council is privatizing the telecom sector.

Hayek suggested that Arab telecom companies appear to be more interested in the privatization program than their western counterparts after the war.

"The valuation of the telecom sector in Lebanon may have slightly been affected after the war but the government is still hoping in getting a good price," he said.

International investment banks JP Morgan and Citigroup presented a study on the state of the telecom sector to the Telecommunication Ministry estimating the value of the two mobile networks.

Hayek declined to disclose the valuation of each mobile network, although some informed sources said that the investment banks estimated the value of each network between $1.5 billion and $3 billion.

The two mobile networks generate more than $750 million for the government each year, while fixed-line revenues bring more than $400 million a year to the Treasury.

Hayek said that the general idea is to sell a majority stake of the two cellular networks to strategic investors, with the state retaining the remaining shares and float them on the stock exchange.

Kamal Shehadi, the chairman of Connexus consultancy firm in Lebanon, said investors are still interested in the telecom sector in Lebanon despite the war.

"Investors will pay and they will pay a good price but it won't be the same if the situation was normal," Shehadi said.

He added that the value of the telecom equipment such as satellites and antennas that were hit by the Israelis during the war is a small part of the equation.

"The value of the telecom sector is not in the equipment, but instead in the money it generates each year."

Although Lebanon's telecom infrastructure suffered hits in the Israeli bombardment, mobile-phone service was uninterrupted in many areas.

Shehadi added that one of the things which determines the value of the telecom network is the terms of the license that will be offered by the government to the bidders.

"If the war breaks out again in Lebanon then obviously the valuation of the license will be affected, but I don't foresee any war in the country," he said.

Shehadi said Palestinian authorities had sold a mobile license to the Kuwaiti Al Watanieh telecom company for $350 million, even with the bad situation in Palestinian territories.

Beirut 02-10-2006
The Daily Star

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