PA moves on second licence

17 March 2006
The Palestinian Authority (PA) on 7 March announced plans to issue a second mobile licence to end the official monopoly of Palestine Telecommunications Company (PalTel) subsidiary Jawwal. The licence will be awarded to a new company created in conjunction with a strategic partner selected through a bidding process.
The Palestine Investment Fund (PIF), the private sector arm of the PA, is expected to initiate the creation of the new company immediately, with an international consulting firm to be appointed to advise on a framework and terms of reference for the planned tender release by June.

An ownership structure for the new licensee company has been outlined. The PIF will hold 25-30 per cent of the company, while the strategic partner will take 25-35 per cent. Up to 30 per cent of the shares will be sold in a public offering and 10-15 per cent has been earmarked for local firms.

It is understood that the licence will stipulate that the strategic partner must invest in building and improving the Palestinian telecoms infrastructure. The decree is still to be signed by the prime minister, until which time the draft law will be subject to 'minor amendments', Telecoms Minister Sabri Saidam told MEED on 15 March.

'This development is groundbreaking news,' says Sam Bahour, a partner in Ramallah-based Applied Information Management. 'This is the first time the government has taken a decisive step towards the implementation of liberalisation.'

However, Abdul Malik al-Jaber, chief executive officer of PalTel Group, says the new licence will be useless unless the PA improves the underlying market conditions. 'The PA must work hard to introduce additional frequencies and address the problem of illegal competition [from Israeli telcos],' Al-Jaber told MEED on 13 March. 'When you count the four Israeli companies that compete illegally in the market, this new company will be the sixth operator.'

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