Managing the revolution

Industry leaders across the telecom sector say the future will be dominated by mobile broadband. Samer Salameh, the CEO of Lebanon’s Alfa says it could help restore the telco to its former glory, but he has some words of advice for operators in the region.

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Managing the revolution
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By  George Bevir Published  December 29, 2009

Lebanon’s Alfa has some catching up to do. When the operator launched in 1994, it was one of the first mobile networks in the region.

By 2002 it counted some 600,000 subscribers and was on course to be one of the region’s leading operators. But in 2002 the government took over the company and it was then, CEO Samer Salameh says, that the period of growth ground to a halt.

“Basically the company sat there dying for the next four years,” Salameh says.

Despite their headstart, the Lebanese telcos suffered during a period of under- investment and neglect, partly due to political instability in the country, while operators in neighbouring countries and the wider Middle East caught up with and then overtook their Lebanese counterparts. 

Egypt’s Orascom was awarded the management contract for Alfa in February last year and Salameh is immensely proud of what his team has achieved in the last nine months, and he is hopeful that the government will acknowledge the progress that has been made when the contract expires at the end of January.

“We grew the company in nine months almost as much as it grew in 15 years,” he says. “We took over a company that had 580,000 subscribers. Within nine months we reached a million subscribers. We effectively doubled the size.”

The growth has been in keeping with Lebanon’s Council of Ministers early 2009 set of reforms designed to lift penetration rates and lower tariffs, with Alfa and rival network Zain-managed MTC Touch achieving their targets of increasing their subscriber bases by 400,000 each ahead of schedule. The targets had the desired effect, with mobile penetration rising to just over 50%, from a lowly early 2009 figure of 35%.

With government funds, Alfa has embarked on a network upgrade process, changing “the entire infrastructure” of the operator. Salameh says the technology had not been upgraded since 1994, and in nine months Alfa has changed the core, the intelligent network, the processing, the billing, the charging systems and the transmission network, with an additional 164 bases stations installed in the process.

Salameh admits that Alfa still has some catching up to do, and he is presiding over another set of upgrades that he hopes can see it kick off the new decade with a robust network capable of serving the country’s data requirements, which could capitalise on the absence of a comprehensive fixed broadband infrastructure.

“Alfa was one of the leading service providers in the Middle East – if not the world – back in 1994,” he says. “We lost that position for a while and now with the advent of broadband and through the leadership of Orascom Telecom, we are set to recapture our rightful position as a leader in that wireless space.

The road to privatisation

Alfa CEO Samer Salameh says that Orascom chairman Naguib Sawiris has made it clear that he considers Lebanon a strategic country, and that when privatisation of Lebanon’s operators takes place, he wants to be involved. Privatisation of the telecom sector was one of the reforms Lebanon agreed to in a 2007 deal to secure international financial assistance.

It was meant to be happen in the third quarter of 2007 but has been continually sidelined. Relinquishing government ownership was considered to be a way of reducing public debt (one month after the 2007 conference Lebanese economy minister Sami Haddad told Lebanon newspaper The Daily Star that privatisation would raise US$5 billion for the cash-strapped state) and increasing competition and the performance of the operators.

Etisalat is one of at least ten telcos to state its desire to take on one of the operators when they are privatised, but according to Salameh, they will have to wait for the chance. “I think the consensus is that it will not be in 2010. We will have to wait for 2011 and the financial industry to come back. The markets are not ready for privatisation,” says Salameh.

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