Liban Telecom to be privatized and GSM market to reawaken
The new telecom law in Lebanon, expected to be enacted by Parliament in 2003, will achieve the goals of separating regulation from operation. This law is planned to reform the telecom sector and will create a separate regulatory body and operator, Liban Telecom.
According to a recent Arab Advisors Group publication, the new law will also become the foundation of the required legal framework to privatize the sector and make all government involvement transparent and well defined.
“The long GSM crisis in Lebanon, that has crippled growth in the market since June 2001, is on the verge of resolution.” Arab Advisors Group's senior analyst, Sami Sunna' said. “There has been a transfer of ownership of both operators, LibanCell and Cellis, to the hands of the Lebanese government after the two operators were compensated. The next step in Lebanon is the sale of the two GSM operators, expected in early 2003, and further liberalization of the telecom sector.” Sunna' added.
The Group believes that unilaterally canceling a signed build-operate-transfer (BOT) agreement with international operators diminished the confidence of many potential new entrants into the Lebanese communication markets. Any future entrants to factor in this low confidence into their financial bids, translating into lower than fair-value bids.
“Despite plans to privatize and liberalize the fixed sector, the Arab Advisors Group does not foresee spectacular growth in this segment. Between 2002 and 2007, we project Lebanon's PSTN market to grow by a CAGR of 1.9 percent only and maintain a penetration rate of around 21 percent.” Sunna' explained. “Indeed, competition on the International Long Distance service is projected to cause Lebanon's total PSTN revenues to decline annually by 3.9 percent to reach around $ 415.8 million in 2007, compared to around $ 507.8 million in 2002.”
The GSM market is expected to grow substantially during the forecast period and the market will remain a predominantly prepay market. The Arab Advisors Group projects Lebanon's GSM market to grow by a CAGR of 16.7 percent to reach a penetration level of 42 percent in 2007. The number of cellular subscribers is projected to exceed the number of mainlines in 2003 after briefly exceeding them in 2001. Lebanon's total GSM revenues are projected to reach more than $ 884.7 million in 2007. — (menareport.com)
© 2003 Mena Report (www.menareport.com)