Lebanon GSM operators to get indemnity for cancelled contracts
Lebanese Telecommunications Minister Jean-Louis Kordahi said Wednesday, July 4, the country's two mobile phone companies who recently had their contracts annulled would be compensated because Lebanon was eager to reassure foreign investors.
"Four international auditing firms are due to present their bids on Monday and the Council of Ministers will entrust one of them to calculate the amount of the indemnities," Kordahi said at a press conference.
"The Lebanese state has always honored its obligations toward other countries and foreign companies and is determined to do it," he said.
Kordahi however insisted that Lebanon also "had the right to revoke contracts with Cellis and LibanCell in line with one of the clauses which stipulates indemnities and this is what Lebanon will do."
On June 12, the Lebanese government decided to tear up the 10-year Build-Operate-Transfer (BOT) contracts signed in 1994 with Cellis and LibanCell, which have been operating the country's GSM network.
France Telecom-Orange has 67 percent of Cellis shares while Finland's Sonera is a 14-percent stakeholder in Liban-Cell.
The Lebanese government has decided to auction off the lucrative cell phone licenses that would give the winning bidder a 20-year franchise and would be also open to Cellis and LibanCell.
Few years ago, Cellis and LibanCell started opposing government limits on the number of subscribers they could have and how much they had to pay the state for subsidiary GSM services not covered in the contracts.
The government was asking each firm to pay $300 million to increase the number of subscribers. Contrary to what Cellis and LibanCell claimed, Kordahi said the original contracts had a limit of 250,000 subscribers for each company. "The current number of cellular telephone lines has reached 800,000," said Kordahi.
Kordahi denied that tearing up contracts with the two companies would have a negative effect on foreign investment in the country. "Investors know that the mobile telephone sector in Lebanon is very lucrative," he said. "In seven years, Cellis, which has a capital of $30 million, has regained 70 percent of its $350 million investments and has distributed to its shareholders profits exceeding six times its capital," he said.
Kordahi said the Lebanese government has refused an offer, notably by Cellis, to buy the licenses directly because "an auction ensures transparency which cannot be guaranteed in an agreement."
On June 19, Jean-Francois Pontal, the number two at the French telecommunications giant France Telecom, visited Beirut to protest the Lebanese government's decision to tear up the contracts. ― (AFP, Beirut)
© Agence France Presse 2001
© 2001 Mena Report (www.menareport.com)