Road to Recovery

MTC Touch says it is gradually overcoming the technical and operational difficulties it has faced since securing a contract to manage one of Lebanon’s mobile networks last year.

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By  Richard Agnew Published  January 12, 2005

|~|mtc-touch1.gif|~|Mohammed A. Shabib, general manager of MTC Touch.|~|The MTC group may have been willing to take a risk on one of the three mobile licences in Iraq, but its entrance into Lebanon could feasibly be described as equally pioneering. Since taking over the network formerly known as LibanCell on a management contract in June last year, the Kuwait-based company has had to face up to a series of consumer boycotts over high tariffs, an exodus of staff and a PR-damaging outage. Following years of under-investment in the mobile network and stalled privatisation, it also has had to adapt to the difficulties of planning improvements while not having control over the operation’s purse strings. Its first step after the network handover, therefore, was to get a US$14 million emergency budget approved by the Lebanese Ministry of Telecommunications. “When we received the network, it had not received any investment apart from normal maintenance in the previous couple of years,” says Mohammed A. Shabib, general manager of MTC Touch — the Kuwaiti group’s recently re-branded Lebanese division. “When we took it over, we submitted an emergency plan to the government to make improvements, particularly in catering for roamers as it was high season for tourists at that time. Now, we’re also talking to the government about providing additional capacity and coverage in certain areas, and improving certain platforms — just to be in line with other operators that are ten years old,” he adds. Part of the initial investment was spent on an upgrade of the network’s GPRS capability. But the bulk, Shabib says, has gone on improvements to the operation’s intelligent networking (IN) platform, in order to provide additional services to its pay-as-you-go customer base. Supplied by Siemens, the solution is now being tested and is expected to go live early next year. “The network adopted early prepaid solutions but investment was capped three years ago,” says Shabib. “It doesn’t have an IN platform that allows new services to be provided to prepaid subscribers, who form most of our customer base. But we’ve already purchased an IN and it has now been installed — we’re just in the testing phase to get all the bugs out,” he adds. With a new numbering plan expected to be announced by the government before Q205, MTC Touch also wants to invest in an expansion of the network to handle any increase in demand. Lebanon’s two networks were long limited to 400,000 subscribers each, but MTC said in September that it had raised its customer base to around 425,000 by recycling old numbers from disconnected users and those that have churned. It has since been licensed to increase its capacity to 500,000, but is yet to receive approval from the government for the investment that would be required. “We need to add more hardware on the radio side,” says Shabib. “We are proposing different scenarios to the government, depending on the market’s response, and each one has a different investment requirement. But there will be one solution that’s going to cost the government money,” he adds. Another difficulty that the company has faced has been in the area of tariffs, which have remained particularly high in Lebanon because of the networks’ limited capacity and troubled privatisation process. The situation has led to three consumer boycotts of mobile services since the management contracts began, but no plans have yet been announced to reduce them. “Pricing is not our decision, but it has to be discussed with us,” says Shabib. “If the government brings the prices down, people will talk more and that will demand more capacity on the network, so the government will have to spend more money. The Ministry of Telecoms is talking about a reduction in pricing — the question is when,” he adds. Consumers have also been irked by a US$10 million advertising budget handed to the MTC and Detecon, which is managing the former Cellis network, as well as an outage in October that affected MTC’s services in Beirut and Mount Lebanon after an attempted upgrade to a Siemens-supplied switch. “This happened during a normal software upgrade to a switch in the northern region of the country,” says Shabib. “It went successfully for the first six hours… but started showing some bugs and kept going on and off. So with the supplier, we went back to the earlier release. It was just unfortunate that the switch was covering a big part of the country,” he adds. Although analysts have argued that the major challenge the two networks will face will be to preserve their working relationship with the government when spending is under state control, Shabib claims that the partnership is working out fine. “Dealing with public sectors in this region can sometimes be difficult, but this Ministry is in favour of offering the best services to mobile subscribers,” he says. Nevertheless, the networks may have to deal with the entrance of a third-state owned player into the market this year if Ogero, the national operator, takes up its mobile licence as planned. They are also obviously keen to see the networks’ privatised as soon as possible, when they hope their restrictions will be removed. “The sooner privatisation happens, the better,” says Shabib. “If the market is in private hands, there will be steep growth in penetration, but if it remains in public ownership — even with a third licence — the growth will be slower,” he adds.||**||

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