Troubled birth of new GSM licences

26 July 2002

The Supreme Privatisation Council has issued a tender for the international auction of two 20-year GSM licences, to replace two 10-year build-own-operate (BOT) contracts cancelled last year. The government hopes to raise as much as $2,000 million from the sale of the licences, to help offset spiralling public debt (see Tenders).

The tender issue has been overshadowed by an ongoing 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 licences. Both the government and the two operators have taken the dispute to international arbitration. Meanwhile, LibanCell and the Telecommunications Ministry are at loggerheads over the role of KPMG, which has been hired to audit both companies, but was blocked by LibanCell in early July from inspecting its operational side (MEED 19:7:02).

The government itself is divided over the logistics of the sell-off. One political faction, led by Prime Minister Rafiq Hariri, advocates Cellis and LibanCell continuing to operate the networks until the new licences are awarded. Another faction, backed by President Lahoud, proposes that the companies hand over equipment to the government immediately. Telecommunications Minister Jean-Louis Qordahi said in a 17 July statement that 'any talk of 'seizure or nationalisation' is inappropriate,' but went so far as to propose that the government takes over the two GSM networks if the auction fails.

HSBC Investment Bankis the financial adviser on the sale.

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