A review of the reality of telecommunication at Issam Fares Center

Nahas: the cellular phone has become the “oil of Lebanon”

Addyar- November 25, 2010

Telecommunication Minister Charbel Nahas presented a detailed view of the reality of the telecommunication sector and the future projects at a conference entitled: “To Be a Telecommunication Minister in Lebanon”, organized by Issam Fares Center for Lebanon. The conference was attended by a group of researchers and interested people.

Nahas presented the reality of the Telecommunication sector since the end of the Lebanese war until now. He highlighted two main articles stipulated in the declaration of the current government: the structuring of the telecommunication sector away from the fiscal logic and the execution of a number of investment projects. He indicated that the role of the private sector in this area emerged naturally after the telecommunication network suffered major damages during the war.

Regarding the mobile phone sector, Nahas said that instead of creating a mobile phones system complimentary to the fixed landlines system, two BOT contracts were adopted to run the mobile sector, on a basis that allows the state to retrieve this sector. The failure appeared in the first principle of this formula related to the building phase. The private sector used minimal capitals to build the two mobile networks, putting this weight on the shoulders of the citizens through a 500 USD subscription fee. While the second principle related to the operating phase succeeded due to the large human skills and the experience of the Ministry, the third principle concerning the transfer of the sector to the state failed as well.

With the increase of the sector’s profits and the accumulation of public debt at the same time, the state needed to seize this very profitable sector. Nahas indicated that the mobile phones sector has become the “oil of Lebanon”. It provides huge amounts of money since more than 50% of the sector’s income are from taxes and monopoly. He added that if this monopoly of the mobile sector is sold, the buying party will maintain the high charges on mobile calls, which will confirm the monopoly forever. He also considered that establishing a third company will neither lower the prices nor increase competition since the state refuses to lessen the taxes on phone calls.

Nahas signaled the need to modify the situation with the two companies that run the mobile sector to guarantee the accountability. This move will also provide a clear idea about what they own and what they spend. It was also established that the phone budget is annexed to the general budget and the profits are not transferred to the Finance Ministry during the year unless the state is in dire need for these funds. The Ministry of Telecommunication is supposed to provide the Finance Ministry with annual profits of about a billion dollars. However, this has to be preceded by the fulfillment of the ministry’s debts, on top of them the municipalities’ shares.

Answering a question about the reclamation of the 500 dollars fee paid by the subscribers at the launch of the mobile sector, Nahas expressed his surprise that no one is claiming these rights, indicating that the municipalities did not demand their due shares yet.