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French Version

Lebanon's mobile contracts need re-examination

Director of OGERO says current situation hinders development

A senior Lebanese telecom official said that the existing contracts with Lebanon's two mobile phone operators should be re-examined to better serve the local market.

"The current contract is hindering the development of the telecom sector and preventing investment in the mobile phone sector," newly appointed director general of OGERO, the government owned telecom operator, Abdel-Menem Youssef said at a news conference.

Former Telecommunication Minister Jean Louis Qordahi signed four-year contracts with the Kuwaiti-based company Mobile Telecom Company and the German firm Detecon to operate the state's 800,000 cellular networks in return for a monthly fee. The number of lines has since grown to almost one million.

According to the contract, all of the revenues go to the Treasury. The government has the right to revoke the contract after giving the companies six months paid notice.

These comments came during a conference on "The Mobile Communications in Lebanon: From the Second to the Third Generation - International Perspective," organized on Monday at the Engineering Syndicate.

"There should be a lot of changes in the contract," the CCO of MTC Touch Lebanon, Saad Nasir, said.

Echoing similar views, the president of Alfa, Ineke Botter, said the contract is a source of frustration.

"If the contract allowed for more funds to be made available, the company would use them "very well" to develop the network," she said.

Meanwhile, Telecommunications Minister Marwan Hamadeh, said the ministry is considering privatization as the "future of the sector."

He added: "We will be providing licenses for the existing businesses as well as granting a third license for a third generation mobile system better known as UMTS (Universal Mobile Telecom System) operation," Hamadeh said.

But, Youssef clarified that the type of privatization to which the minister was referring did not imply full privatization but rather "introducing one or more strategic partners to the business."

Hamadeh admitted that the Lebanese state and the Lebanese society took "the wrong approach" in the way they oriented the mobile phone sector to cover the accumulating deficit of the Treasury.

He lamented that Lebanon ranked among the lowest in the Arab region with respect to its mobile phone sector and said: "We adopted a quantitative approach, while we needed to make a developmental one which matches Lebanon's important human resources."

Hamadeh said that the ministry was promoting additional "qualitative services," not only to increase the revenues of the state, but also to improve the daily management of the mobile phone sector.

He also indicated that the implementation of the privatization law 431 led to an increase in the penetration rate by around 25 percent, reaching almost one million subscribers to the mobile phone network and added that this rate will be increasing in the coming years.

Nasir said that with the current pricing rate of the mobile phone service which is among the highest in the world, it would be difficult to implement the third generation mobile phone services.

"It is hard to introduce the new services when the prices are already high for the basic ones," he said, adding that he tried to convince the ministry to reduce the prices.

He added that the other obstacle for introducing the third generation is the lack of required investment. He indicated also that the problem was that the contract the company signed with the government in 2004 is only for operation which is not the case in all the other countries of the region where MTC touch operates.

The conference also included presentations on the third generation technology in the world and the region with interventions by Jean-Pierre BienaimŽ, head of the UMTS Forum.

Beirut 05-12-2005
Raed El Rafei
The Daily Star

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