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French Version

German firm Detecon likely winner of one cellular contract - French or Kuwaiti firm will also be chosen (Daily Star)

Qordahi favors transferring management of networks as soon as possible; Hariri will reportedly approve the minister's decision

The German firm Detecon, and either Kuwait's Mobile Telecom Company (MTC) or the French company Orange are likely to win the four-year management contracts for Lebanon's two cellular networks. Sources told The Daily Star that the Cabinet, which will meet on Saturday, will definitely select Detecon to manage one of the networks.

They added that the second network will either be awarded to MTC or Orange.

Prime Minister Rafik Hariri, who is connected to one of the current operators, LibanCell, is apparently ready to approve the recommendations of Telecommunications Minister Jean-Louis Qordahi, who favors the transfer of management as soon as possible.

Detecon, which is affiliated to the giant Deutsche Telecom, has offered to run LibanCell for four years for $192.3 million, or $4 million a month, and Cellis for $201 million, or $4.1 million a month. This is 30 percent less than the fees currently charged by Cellis and LibanCell.

The second runner-up is MTC, which offered to run LibanCell for four years for $209 million, and Orange, which offered to run Cellis for $229 million.

Orange, which controls the majority of Cellis' shares, is locked in a legal dispute with the government over alleged violations of the Build Operate Transfer (BOT) contract.

The government accused both Cellis and LibanCell of exceeding the number of mobile subscribers permitted and of using microwave frequencies without paying any fees to the state. However, the companies deny these allegations. Qordahi traveled to Geneva on Tuesday to attend the first arbitration hearing between the government and Francetelecom.

A telecom expert said that if the government awarded the contract to Orange, the French company might be willing to make an out of court settlement with the Telecommunications Ministry on the legal dispute. He added that some ministers prefer to award the second contract to MTC because of the strong historic ties between Lebanon and Kuwait.

In an interview with one of the local television stations, the chairman of MTC, Saad al-Barrak, urged the government to endorse his company, adding that it was better to let Detecon run the first network and an Arab firm to manage the second.
The ministry is unlikely to reduce the tariffs on cellular phones at this stage, but may consider it if the number of mobile subscribers jumped from 800,000 to more than a million in a couple of years.

The government is generating $49 million a month from both networks, a revenue representing 20 percent of the total income of the state. Qordahi said that management contracts with the new companies did not mean that the government had abandoned plans to privatize telecoms. He added that the government had the right to revoke the contracts on six month's notice.

Privatization is a key element in the government plan to reduce the $33 billion public debt. However, the government may be able to securitize some of the future revenues of the cellular networks this year.

Beirut 05-04-2004
Osama Habib
The Daily Star

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