Iraq war delays GSM sale

11 April 2003
The privatisation of the mobile phone networks has been stalled by the war in Iraq. The Higher Council for Privatisation (HCP), which is managing the bid process for the licences, was due to announce a shortlist of prequalified bidders by 15 March but has yet to do so. 'There is no fixed date because of the uncertainty,' said a project source in early April. Another project source said it would be the end of June before prequalification could begin (MEED 4:1:03).

Beirut hopes to raise as much as $2,000 million from the sale of two GSM mobile phone networks and related 20-year licences through an international auction, and from an international tender for the management of the two existing networks for a three-year term. The revenues are needed to help offset spiralling public debt.

Sixteen local and international telecoms companies registered their interest in the licences by the 10 February deadline. Interested companies are: theSupreme Council for Investment Qatar,Germany's Detecon, Greece's OTE, Egypt's Orascom Telecom, National Mobile Telecommunications Company (Wataniya Telecom) and Mobile Telecommunications Company- both of Kuwait, FTML, Orangeand Bouygues Telecom - all of France, Norway's Telenor Management Partners, the US' American Telecom Group,Jordan's Fastlink, LibanCelland Lebanese International Telecom- both local, and companies identified as Linkcelland Investcom Holding.

The licences will replace two 10-year build-own-operate (BOT) contracts held by GSM operators Cellisand LibanCell, which were due to run until 2004 but were cancelled by the government in 2001. A long-running dispute over compensation was finally resolved on 14 December 2002, when the two companies agreed to transfer the networks to the state after the government suspended its demand for $600 million in fines for contract violations. It also agreed to pay $178 million in compensation for the early termination of the contracts (MEED 16:12:02).

In January, European firm Euro Strategywas awarded a $3.5 million contract to advise the government on establishing a telecoms regulator that will lay down connection contract rules, create technical standards and issue permits for telecoms projects. HSBC Investment Bankis the financial adviser on the sale.

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