GSM dispute rumbles on

13 December 2002

The government's latest attempt to settle its long-running dispute with GSM operators Cellis and Libancellfailed on 9 December, when the two refused to sign a new transfer deal. The two firms had their 10-year build-operate-transfer (BOT) contracts on the country's two cellular networks, due to run until 2004, cancelled in July 2001. They have since been in conflict with the government over the terms of an agreement to transfer the networks to the state.

The main bones of contention had been the compensation due to Cellis and Libancell and the fines the government claimed they owed for contract violations. On 29 November the cabinet approved a new transfer agreement, which suspended the $600 million fine demand and offered $178 million in compensation.

Under the plan, criticised by some in parliament as being too generous, Cellis, a subsidiary of France Telecom, would receive $118.6 million and Libancell $60.5 million. However, the operators refused to sign the deal, presented to them by Telecoms Minister Jean-Louis Cordahi on 4 December, and demanded amendments.

The main point of disagreement was the clause dealing with international arbitration over fines, with the companies demanding changes to the location and timing of negotiations. Cordahi initially refused any further compromise, but then on 11 December agreed to change the location to Stockholm. However, he refused to set a deadline for negotiations. Beirut intends to sell off the two GSM networks as part of its privatisation programme.

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