Lebanon is at the threshold of major telecom sector reform.

July 31, 2005

Lebanon’s telecom sector is set to have an operational regulator soon charged with implementing wide reaching telecom sector reforms along international best practices. Political uncertainty and turmoil had for long stagnated what was once the Arab world’s most thriving telecom (esp. cellular) market. Barring further political and security turmoil, Lebanon’s telecom sector is slated for major changes in the next few years.

Lebanon is moving towards separation between regulation and operation in the telecom sector. On March 15, 2001, a new telecom law was proposed by the Ministry of Telecommunications (MoT) to the council of ministers. Telecom Act no. 431, which was approved by the parliament on July 22, 2002, aims at reforming the telecom sector by creating a separate regulatory body and a telecom operator (Liban Telecom- which will then be able to exploit its third GSM license). By July 2005, the TRA board members were still not appointed which is a prerequisite before moving to convert the fixed line operator OGERO into a government owned company called Liban Telecom. This will be followed by Liban Telecom privatization, which will then be followed by liberalizing the market.

A new report, “Lebanon Communications Projections Report” was released to the Arab Advisors Group’s Telecoms Strategic Research Service subscribers on July 28, 2005. This report can be purchased from the Arab Advisors Group for only US$ 850. The 54-pages report, which has 60 detailed exhibits, provides a detailed analysis of the Lebanese fixed and cellular markets and profiles all the major operators in the country such as OGERO, MTC Touch and Alfa. Please contact the Arab Advisors Group to get a copy of the reports Table of Contents.

Any investment in this report will count towards an annual Strategic Research Service subscription should the service be acquired within three months from purchasing the report.

“By mid 2005, the Ministry of Telecommunications (MoT) still solely operates Lebanon’s fixed telecommunications network and is in charge of regulating the whole of the telecommunications in the country. The government sets the tariffs for basic, GSM and leased line services, and is currently the owner of the fixed PSTN network.” Mr. Ahmad Al Assad, Arab Advisors Senior research analyst wrote in the report. “The GSM market growth was held back for more than three years. The original BOT contracts stipulated that both networks take-up only 250,000 subscribers each. This translated into a penetration rate of no more than 14% back in 1998. Subscribers grew to reach around 800,000 at year-end 2002 and were held there until the beginning of 2004. After the two companies took over management of the networks in mid June 2004, subscribers’ numbers began to climb to reach 880,000 by end of 2004.” Mr. Al Assad added.

On the PSTN front, The Arab Advisors Group projects a steady decrease in PSTN revenues and ARPU in the upcoming few years. The drop in ARPU would be mainly driven by lower international rates, traffic migration to the GSM networks and the expected entry of the second fixed line operator in 2009 after the 3-year exclusivity period of Liban Telecom’s ends. Fixed lines revenues are expected to drop by a CAGR of 1.8% between the years 2005-2009 to reach US$ 341.8 million by yearend 2009.

The Arab Advisors Group’s team of analysts in the region has already produced over 400 reports on the Arab World’s communications and media markets. The reports can be purchased individually or received through an annual subscription to Arab Advisors Group’s (www.arabadvisors.com) Strategic Research Services (Media and Telecom). To date, Arab Advisors Group has served more than 300 global and regional companies by providing reliable research analysis and forecasts of Arab communications markets to these clients.