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French Version

Qtel to bid for Lebanese mobile firm

Announcement comes as civil groups speak out against privatization

Qatar Telecommunications Co. (Qtel) 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 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 OGERO 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 Alfa and MTC 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, Qtel's executive director for group communications. When asked for which company Qtel 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) 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.

Qtel 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) 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 Qtel, which makes 76 percent of its profit in Qatar, fell 1.05 percent on Wednesday.

At present, MTC Touch and Alfa 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.

Beirut 28-12-2007
The Daily Star

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