Syrian mobile licence auction may not go ahead

17 May 2011

Uprisings and uncertainty jeopardise licence

The auction of Syria’s third mobile licence may not go ahead due to the current civil unrest in the country. Analysts warn that if the sale does proceed, its value will be much lower than expected.

“Given the political situation, it will be difficult to see the sale of the licence being consummated. Even after the situation stabilises, the value of the licence will diminish, given the increased risk factor,” says Mohamed Amersi, founder and chief executive officer (CEO) of Swiss consultancy Emergent Telecom Ventures, which is acting as adviser to one of the bidders.

The Communications Ministry has yet to announce updates on the status of the process.

“The government is pressing for reforms [and] privatising the telecoms sector will be part of this, but with the current situation in the country, it is not of the highest priority,” says Ghassan Hasbani, CEO of Saudi Telecommunications Company (STC) International.

The initial valuation for the licence was $600m, but the unfavourable licence requirements (25 per cent revenue share and 20 per cent government-owned stake) decreased the value and the reserve was posted at just $122m. The ongoing political protests are likely to have further impact.

Of the five companies that qualified for the licence, only STC and Qatar Telecom (Qtel) remain. The others – Turkcell, France Telecom and Emirates Telecommunications Corporation (Etisalat) –dropped out, dissatisfied with the licence structure.  

“We are not backing down, we are going forward with it,” says Saud al-Daweesh,chairman of STC, who went as far as saying the company is confident it will win the bid, but is monitoring events closely.

“We will reflect all events, conditions and circumstances in the licence price,” says Hasbani, who is leading the bidding process for STC.

The other bidder also appears to have some reservations. “As previously stated, Qtel is aware of a delay to the process and is watching the situation carefully,” says a company spokesperson.  

The Communications Ministry was unavailable for comment.

Syria’s telecoms sector has faced some upheaval in the current climate with disturbance to mobile and internet services. Incumbent operator Syriatel, owned by Rami Makhlouf, President Bashar al-Assad’s first cousin, has become a symbol of the corruption in the country. The European Union (EU) has imposed sanctions against Makhlouf, who will face an asset-freeze and travel ban.

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