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The business of… Beirut

Despite infrastructure challenges, a hefty national debt, and Lebanon’s $4 billion deficit, the business of Beirut is booming.

June 28, 2010 10:48 by

Telecommunications

You might sum up the state of Lebanon’s struggling telecom industry in one term: “state-owned.” The country’s cell market was ranked the least competitive in the region this year, based on the fact that the government owns the two mobile operators and retains full control over the sector. Lebanon’s only fixed line operator, Ogero, is state-owned, as well.

This lack of participation from the private sector means Lebanon has the highest cell phone rates in the region, at $0.44 a minute. Combined with stone-age slow internet and pending enforcement of a ban on voice over internet telephony, one begins to see the urgent crisis facing business in need of affordable communications – not to mention a Lebanese diaspora estimated at more than 12 million strong.

Recent calls to enforce a 2002 law banning voice over internet telephony have been met with outrage, as critics contend that the state-owned telecoms sector and the Finance Ministry have too much to lose by privatizing. Telecoms revenues, estimated at $1.6 billion last year, remain a vital source of income for the national budget.

But relief may be in sight. Raya al-Hassan, Lebanon’s finance minister, said privatization efforts may begin soon, a move that proponents say could bring in as much as $7 billion for the sector.

Earlier this month, the chairman of Egypt’s Orascom Telecom, whose company has a management contract with one of Lebanon’s mobile telecoms firms, said “You are the only country where penetration is not 100 percent. It’s unbelievable that underdeveloped countries in Africa have reached 120 percent and you’re at 60-70 percent.”

“Someone has to take this company and spend on it, improve the quality, introduce new technologies and increase sales,” he added.

 

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