Lebanon rethinks its mobile strategy

After saying that it was going to sell off its mobile telecomms networks, Lebanon may be looking at an alternative way of cashing in on its mobile operators.

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By  David Ingham Published  September 2, 2003

Lebanon’s government appears to have had yet another change of mind over what to do with its mobile telecomms networks.

According to reports in the country’s daily newspapers, the government is now looking at ‘securitisation’ of one or both of Cellis and LibanCell. This would involve the government keeping control of the operators and borrowing money against their projected future revenues.

It had looked as if Lebanon might sell the networks when it recently issued a list of six companies entitled to bid for them in any future auction.

However, the country has a public debt of $30 billion plus, which it needs to reduce quickly in order to satisfy the conditions of several loans extended to it by the Paris Club of donor nations. According to a Daily Star report, a 20 year securitisation period could net the government around US $10 billion in loans. Opinion differs hugely over how much could be generated through an outright sale.

Earlier reports suggested the government would seek $500 million for each network if it chose to sell them. However, the CEO of one of the companies eligible to bid told Arabian Business previously that he thought $300 million each would be more realistic.

Securitisation is a controversial method of raising finance. It allows companies without physical collateral to access money, but if future revenues fail to match expectation the borrower can find itself in trouble.

For those that follow football, securitisation was used by Leeds United to help fund its lavish spending on players a few years ago. Leeds borrowed heavily against anticipated revenues from European football.

However, operational indiscipline, coupled with failure to qualify for the Champions League, sent Leeds into a cash crisis that has forced it to sell off its best players at knockdown prices.

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