Lebanon telco auction hit by delay

Sale of majority stakes in Alfa and MTC Touch pushed back until early summer, cabinet statement says.

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By  Yara Bayoumy Published  January 24, 2008

The Lebanese government has postponed the auction of majority stakes in two state-owned mobile phone companies until early summer, according to a cabinet statement obtained by newswire Reuters on Wednesday.

The statement said the deadline for offers had also been pushed back, citing requests from bidders for more time and the delay in Lebanon's presidential election.

Lebanon is selling two-thirds of Alfa and MTC Touch and will offer the remaining shares in an initial public offering (IPO) within a further year. The initial sale is expected to raise as much $7 billion and will go to pay off some of Lebanon's $41 billion public debt.

Lebanon has been without a president since November - part of the country's worst political crisis since the 1975-1990 civil war.

The next parliamentary session to elect army chief general Michel Suleiman as president is set for February 11. The vote has been put off repeatedly because of wrangling over the shape of the new government.

"The delay is justified and I think it will be used productively to give bidders an opportunity to prepare and complete their due diligence," Kamal Shehadi, chief executive officer and chairman of the Telecommunications Regulatory Authority, told Reuters.

Minister of telecommunications Marwan Hamadeh told Reuters in October that any offers would be presented to the future president and government to make a final decision.

Lebanon has around 1.1 million mobile phone users out of a population of four million. The privatisation is expected to increase competition in the sector, where mobile phone charges are among the highest in the Middle East.

Regional telecom companies including Qatar Telecommunications Company (Qtel) and Kuwait's Mobile Telecommunications Company (Zain) have said they would bid for a stake in one of the two firms.

The UAE's Etisalat and Egypt's Orascom Telecom have also said they were considering a bid, in a sector whose annual gross revenue in Lebanon amounts to $1 billion.

"We now have an expression of interest from 10 companies. European and regional companies, and there are some companies from outside the region that are still deciding whether to participate," Shehadi said.

"There are a few more additional companies that are still examining and reviewing the documentation." Shehadi added.

The privatisation has been mired in the protracted political conflict between the anti-Syrian majority and the Hezbollah-led opposition. The crisis has paralysed Lebanon's institutions.

Prime minister Fouad Siniora's Western-backed government has been trying to press ahead with the privatisation as part of reforms to boost the economy. The opposition is against the privatisation because it disputes the government's legitimacy.

Citigroup and JPMorgan Chase & Company are lead managers in the sale. (Reuters)

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