Lebanon sells off state mobile firms

Government hopes to net $7 billion from the sale of the country's two mobile phone companies.

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By  Reuters Published  February 9, 2007

The Lebanese government expects to get as much as $7 billion from the sale of the country's two mobile telephone companies after opening them to bidding later this year, the telecommunications minister said on Friday.

"Our valuation estimate is $2.5 billion to $3.5 billion for each license ... We are preparing for eventual international bids," Marwan Hamadeh told Reuters in an interview.

The telecoms regulatory authority expects to start receiving bids in September or October for Alfa and MTC Touch, he said, adding that he had already been approached by top European and Middle Eastern firms who were interested.

Last month, Prime Minister Fouad Siniora's government proposed to international donors a series of reforms to help the recovery of its war-damaged economy, including the "sale of a majority stake in or 100 percent of the mobile sector companies" and use of the proceeds to reduce public debt.

The government has carried forward with the privatisation process, overriding the opposition of pro-Syrian President Emile Lahoud.

Citigroup Inc. and JPMorgan Chase & Co. have been named as lead managers in the deal.

"We have already charged, asked and dealt with Citigroup and JP Morgan to prepare the privatisation of the two mobile companies. They are well advanced in their work," Hamadeh said.

Lebanon has 1.1 million mobile phone users out of a population of roughly 4 million. The minister said he expected user numbers to increase to 3 million in the next three to five years.

The gross revenue of the telecommunications sector in Lebanon amounts to about $1 billion a year, he said.

Hamadeh says the privatisation should lead to the growth and development of Lebanon's mobile services. He hopes it will bring more competition to the market, because Lebanese law allows no price changes until the companies are privatised.

Lebanon's mobile phone charges are among the most expensive in the Middle East. Post-paid customers pay 13 cents per minute, while usage costs as little as 4 cents per minute in Egypt and 9 cents per minute in Saudi Arabia.

Lebanon has no high-speed, third-generation (3G) capabilities yet, but Hamadeh said he hoped the companies buying the licences would introduce that.

"Voice is going to decline in quantity. What we need are the new 3G products. We need this growth," he said.

Hamadeh said that apart from the privatisation, improvements would be made to the telecoms industry.

"Blackberry will be introduced in the next two to three weeks. I would like to think that the greater Beirut area will have DSL (digital subscriber lines) operational from March." DSL is a technology that enables broadband Internet transmission over standard copper phone wires.

"Our broadband capacity will increase ... to 10 gigabytes," from 150 megabytes currently, Hamadeh said.

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