3. Government strives to increase its share of mounting cellular profits
It all comes down to a puzzling privatization scheme lead by the Ministry of Posts and Telecommunications. In Lebanon there has been, traditionally, only one public telecommunication operator: the ministry itself. Although the Lebanese government decided to relinquish its monopolistic stance in the early 1990s, it seems to be having a hard time letting go of its tight grip on the mounting revenues of the GSM market.
The area seeing the most development in Lebanon’s telecommunications sector is certainly that of mobile telecommunications, and it is no wonder given the sorry state of fixed telephone lines in Lebanon after the conclusion of its civil war.
The government profits through its share in cellular phone bills, calls made to regular and international lines, and from taxing the operators. Both cell phone companies have also been paying the government 20 percent of their annual revenues during the first eight years of the contract, with the figure doubling during the final two years. The contract allows for a two-year extension, which if implemented will see the government’s share climb to 50 percent.
Lebanon's cell phone market is among the most lucrative in the Middle East. Despite high subscription prices, at around $25 per month, and persistent tax increases. Lebanon has among the world’s lowest running costs, with an average cost per minute remaining around 20 cents, half the regional average.
From 1995 to 1999, Cellis and LibanCell made a combined net profit of $264 million, and together made a contribution to the Treasury of around $450 million. The World Bank praised Lebanon's cell phone sector as a landmark success in infrastructure building and privatization
Lebanon’s cell phone operators have achieved high penetration rates of 18 percent, double the Arab average, and second only to the UAE. The average consumption of the Lebanese consumer has reached a record high of 750 minutes per month, compared to the world average of 130 minutes per user per month. This figure is in reach of the world leaders, such as Hong Kong, Singapore and Ireland.
© 2000 Mena Report (www.menareport.com )