GSM row comes to a head

31 May 2002

Parliament met on 29-30 May to discuss a draft law authorising the government to issue two new cellular licences, to replace the 10-year build-own-operate (BOT) contracts terminated last year. The government hopes to raise some $2,000 million from the sale of the licences, as part of a privatisation programme intended to offset spiralling public debt.

The issue has been delayed by an acrimonious row over levels of compensation due to GSM operators Cellisand LibanCell, and the proportion of profits due to the government under the terms of the original contracts. A report submitted by consultant KPMG to the Telecommunications Ministry in late April says the government should expect to pay the two companies as much as $322 million in total for terminating their licences. 'We are now preparing an audit for the two companies to determine the profits realised in the last couple of years, so we can work out the share due to the government,' an official at KPMG said. 'We hope to present that in about six months' time.'

Telecoms Minister Jean-Louis Qordahi submitted the first KPMG report to the cabinet with the recommendation that the government take possession of the companies' assets by the end of June. The government itself remains divided over the sell-off, with some ministers advocating that Cellis and LibanCell continue to operate the licences until new tenders are issued, while another faction, supported by President Lahoud, insists that the companies hand over equipment to the ministry immediately.

Former telecoms minister Issam Naaman has repeatedly accused the two GSM operators of concealing payments due to the government. 'I am sure that Cellis and LibanCell are making more profits than they are making public,' said Naaman in early May. 'These companies have violated the contract which stipulated that each firm should not exceed more than 120,000 mobile subscribers.' Both companies deny the claims. HSBC Investment Bankis the financial adviser for the GSM sale, for which international tenders are expected to be issued by the end of this year. The board of LibanCell is understood to have decided not to bid for a licence (MEED 3:5:02)

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