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Orascom wins Alfa extension

Lebanese government extends contract after Orascom exceeds 1 million subscribers.

Orascom wins Alfa extension
Lebanon's telecom operators remain in state ownership, although moves are underway to privatise the sector.

Egyptian telecom operator Orascom Telecom Holding (OTH) has been given a six month extension to its management contract of Lebanese mobile operator Alfa, which will now end on July 31, 2010.

Lebanese authorities extended the licence after OTH exceeded the 1 million subscriber mark required as part of the management contract, which it originally signed with the Republic of Lebanon in January 2009.

Under the contract, OTH receives a monthly sum of $2.5 Million and 8.5% of total revenues, which must cover all operational expenses of the network.  The company is allowed to keep any cash remaining as a management fee. The Republic of Lebanon remains fully responsible for the CAPEX during the contract period.

"We're happy with the achievements made in the Lebanese mobile market through our management of Alfa during the past year, and are hoping to secure a presence for OTH within the long term plans of the Republic of Lebanon for its mobile communication market," said Khaled Bichara, Orascom Telecom's CEO.

The mobile network assets of Alfa were transferred to the Republic of Lebanon on August 31, 2002 following the termination of the build, operate and transfer contract under which Alfa was constructed.

Alfa competes with one other mobile operator in Lebanon, MTC Touch, which is managed by Kuwait's Zain Group.

The contract development followed comments from Lebanon's telecommunications minister, Charbel Nahas that a decision would be made by the end of 2010 on how to sell the two mobile phone operators, according to a report from Bloomberg.

Plans to sell the mobile phone companies was delayed owing to a political crisis in 2007 and the first half of 2008, the global recession and elections in 2009.

While previous governments had hoped would raise up to $7 billion from the sale of the two telecom networks, privatisation of Lebanon's mobile sector has been opposed by politicians from Hezbollah.

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