Lebanon weighs telecoms options

14 January 2016

Government needs to make quick decisions following failed bidding process

Lebanon’s Ministry of Telecommunications has extended the existing contracts with Kuwait’s Zain and Egypt’s Orascom Telecom Holding, which manage the country’s Touch and Alfa mobile networks respectively, for one month, following their expiry on 31 December 2015.

However, the extension is unlikely to be sufficient for the cabinet to approve a new round of bidding to attract greater participation from international mobile operators.

This leaves the ministry with few options other than to extend the contracts for another month. If the cabinet fails to decide on a new round of bidding within the extension period, the only option would be for the authority to directly manage the networks. Government ministers have said this is not a favoured option. 

Local media quoted Minister of Telecommunications Boutros Harb as saying the government does not want to manage the networks “because [this] is against Law 431, issued in 2002, which calls for the privatisation of the sector.”

Unlike most Middle East states, where mobile telecoms operators own and operate networks in exchange for annual royalties paid to the government, the Lebanese government retains ownership of its mobile networks, which are being managed by private operators.

The first round of bidding for the management contracts of the two mobile networks was conducted in 2015, but failed due to a lack of tender submissions. It is understood that only two firms, France’s Orange and Zain, submitted a tender. Lebanon’s law requires at least three companies to bid for a mobile licence.

Orascom was disqualified from the prequalification process and was not among the six firms – understood to have included UK’s Vodafone, France’s Orange, Malaysia’s Maxis, Turkey’s Turkcell and Germany’s Detecon, in addition to Zain – that were prequalified to bid for the licences in the initial tender.

Orascom then filed a complaint with the Shura Council (upper house of parliament), which subsequently reversed the company’s disqualification. Ultimately, Orascom, like the five other prequalified international mobile operators, withdrew from the tender, with sources in Lebanon citing that “tough conditions set by the telecoms ministry” prompted the company’s withdrawal from the tender.

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