[November 07, 2008]

Shatah says legal work for cellular sell-off should be wrapped up soon: Donor countries want to see evidence that Beirut is serious

BEIRUT, Nov 08, 2008 (The Daily Star - McClatchy-Tribune Information Services via COMTEX) --
Finance Minister Mohammed Shatah said Friday that the legal and technical aspects of cellular privatization should be prepared before the parliamentary elections in May 2009.

"We have to start the process ... including a special law that authorizes the government to sell the networks to private companies," Shatah told The Daily Star.

The minister acknowledged, however, that privatizing the mobile networks before the elections may not be possible.

The law is still being hammered out by the Telecommunication Minister in collaboration with the Telecommunications Regulatory Authority.

Once the draft is finished it will pass to Cabinet and then Parliament for approval.
"The donor countries that took part in the Paris III conference are not pressing us to privatize the mobile networks before the election, but they want to see some steps taken by the government that will pave the way for the privatization of the networks," Shatah said.

The previous government failed to launch an auction of the mobile networks scheduled for February 2007 due to sharp political differences and repeated security incidents. Officials had been hoping to generate around $6 billion from the licensing of the two networks.

Shatah said that Telecommunications Minister Jebran Bassil, who is an opposition figure, supports the privatization of the cellular networks.

Economists and telecom experts warn that Lebanon will not be able to fetch a good price from the sale under the current global credit crunch.

Shatah said he believes that Lebanon can get a good price from privatization when the time is ripe. He repeated that all the proceeds from privatization will be used to reduce the public debt, which now stands at $45.5 billion.

Experts argue that the government wants to demonstrate to the donor states that the authorities are keen to prepare all the legal ground for privatization to ensure that these states will continue to allocate money for Lebanon.

The minister recently warned that the public debt could reach $49 billion at the end of 2009 if the cellular privatization does not take place before then.

Riad Bashoun, a leading telecom consultant, told The Daily Star that there are two scenarios for privatization that are being debated.

One is the conventional idea of selling off both networks at the same time.
Another, Bashoun said, "apparently backed by Bassil, calls for the privatization of one network, the one currently being managed by MTC Touch."

He added that MTC Touch has 680,000 cellular lines and this figure would rise to more than 1 million before the auction is officially declared.

"Alfa company, which manages the second cellular network, would be incorporated with LibanTelecom, which will be created soon by the government," Bahsoun said.

The two cellular companies are operating the networks on behalf of the government. The contracts with the two firms will expire this month. It is expected that the contracts will be renewed again before the government launches the auction.

The government generates nearly $1.5 billion telecoms each year.
According to the existing law on privatization, 67 percent of the cellular networks will be sold to a strategic partner and the remaining 33 percent will be sold to the public in an initial public offering.

Another source agreed that Bassil was not eager to sell both networks at the same time.
"The minister prefers to incorporate all the assets of Alfa with LibanTelecom and then launch bidding," the expert told The Daily Star.

He added that some quarters are encouraging the minister to offer 33 percent of Alfa's network to foreign companies and 33 percent to the public, with the remaining 34 percent to be held by the government.

Bahsoun stressed that the government could fetch some $4.6 billion from the sale of MTC Touch's infrastructure.

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