Lebanon passes draft law to privatize mobile phone sector
The Lebanese government adopted Thursday, August 2, a draft law for the privatization of the country's mobile phone licenses, after angering GSM operators by tearing up their contracts. "The government agreed on a project law for the privatization of the two licenses of cellular telephone lines," Information Minister Ghazi Aridi told reporters after a late-night cabinet session.
Aridi also said the government had agreed to offer bids for investment into the ailing Tele-Liban national television station. On June 14, the Lebanese government decided to tear up the 10-year Build-Operate-Transfer (BOT) contracts signed in 1994 with Cellis and LibanCell, who have been operating the country's GSM network.
The government had also pledged to pay indemnities to the two companies. The government's decision to auction off the lucrative licenses would give the winning bidder a 20-year franchise. The bidding will also be open to Cellis and LibanCell. But the move has triggered both companies to seek arbitration overseas.
On July 18, Lebanon's State Council ruled that the conflict with France Telecom's unit Cellis will be resolved at a Washington-based special arbitration authority, since most of its shares were foreign-held.
The council however denied international arbitration for the dispute with LibanCell, since the majority of its shares were Lebanese-owned. Finland's Sonera owns a 14-percent stake in LibanCell.
But LibanCell pursued action with the Paris-based International Chamber of Commerce, which contradicted Lebanon's highest court ruling by deciding this week to continue to arbitrate the case.
A 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 their subscriber numbers.
Contrary to what Cellis and LibanCell claimed, the government said the original contracts had a limit of 250,000 subscribers for each company. The government said the firms were operating a total of 800,000 lines.
The International Monetary Fund has expressed backing for the Lebanese government's strategy for a return to health by developing the private sector and privatization, which is expected to raise $2.7 billion.
The government plans to sell off other businesses, including the Electricite du Liban, the state-owned water company and Middle East Airlines. The government is striving to reduce Lebanon's chronic budget deficit, which hit 22 percent of gross domestic product (GDP) last year and pay back some of its massive debt of 150 percent of GDP. ― (AFP, Beirut)
© Agence France Presse 2001
© 2001 Mena Report (www.menareport.com)
- Lebanon, GSM operator row to be referred for arbitration to Washington
- LibanCell: ICC to pursue arbitration over Lebanon GSM operator case
- Lebanon GSM operators to get indemnity for cancelled contracts
- Telecom operator protests at Lebanon move to set new license auction
- Out-of-court settlement sought in Lebanese cellular dispute