OT wins Syrian GSM but quits Nigeria bid

Orascom Telecom subsidiary SyriaTel won the bid to build, operate and transfer (BOT) a GSM network in Syria. The Syrian Telecommunications Establishment, who put the bids out in September last year, announced in January.

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By  Mike Bayman Published  March 23, 2001

Orascom Telecom subsidiary SyriaTel won the bid to build, operate and transfer (BOT) a GSM network in Syria. The Syrian Telecommunications Establishment, who put the bids out in September last year, announced in January. A second BOT licence was awarded to Lebanese company Investcom. “With a population of over 16 million, three of which reside in the capital city, Damascus, and with its prominent role in the Middle East, Syria is definitely a very important market for OT’s regional strategy,” said chairman Naguib Sawiris.

The fifteen year BOT contract requires an up front payment of frequency fees of US $20 million for the GSM 900 MHz network, and an additional $15 million are to allow the operator to use the GSM 1800 MHz frequency bands, OT says in a prepared statement. The contract also defines a revenue sharing agreement. OT is obliged to transfer 30% of the revenues of the first three years, 40% of revenues generated of the second three years and 50% of the revenues of the remaining contract period.

SyriaTel is already running one of two trial networks in Syria, serving more than 11,000 subscribers in the main cities. OT hopes to sign up 75,000 customers in Syria the first year, after a network investment of US $60 million. By the end of the project, OT projects more than 850,000 users, according to the statement.

The company wasn’t as successful in the bid for a GSM licence in Nigeria. OT pulled out when the bid reached an amount of $285 million. Sawiris’s statement after the decision was short: “We found, however, that the auction was exercised by the Nigerian government in a very professional and transparent manner.”

Analysts said the auction of four telecommunications licences in Nigeria, the most populous nation in Africa with 120 million people, marks the birth of telecommunications in Nigeria. Other West African states are expected to follow Nigeria’s move towards liberalisation soon.

Four companies qualified to pay $285 million for a license: state-owned Nigeria Telecommunication (NITEL); Communication Investments Ltd.; Econet Wireless Nigeria; and MTN Nigeria Communications Ltd. The auction brought in US $1.14 billion for government coffers; only Morocco comes close to bringing in so much money for telecommunication licences: $1 billion.

But these companies still face the task of providing telephone services to a country with a 4% density (only 4 out of 100 has a telephone line), which is well below Africa’s overall density of 12. Local reports said fewer than 500,000 of the 700,000 fixed telephone lines in the country are functioning, and only 30,000 of 810,000 NITEL mobile lines are in working condition.

Perhaps OT can count itself lucky that the company now can focus efforts on its GSM operations in Egypt, Jordan, Syria, Yemen, Pakistan, Cote d’Ivoire, Zimbabwe, Zambia, Togo, Burundi, the Central African Republic, Benin, Niger, Gabon, Chad, Congo Brazzaville, Burkina Faso, Uganda and DRC in Sub-Saharan Africa!

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