Telecoms reforms put Egypt and Lebanon on divergent paths

The telecoms sector in Egypt and Lebanon is set for a massive overhaul that could drastically change the landscape of their mobile-phone markets.
To sustain growth in its telecoms sector, Egypt's government was looking to "unify" licences to enable the nation's mobile operators to offer fixed-line and internet services.
"We need to look into how to organise the market between the four players," said Hany Mahmoud, the recently appointed communications and technology minister. "We have no plans to get another player into the market, so we are planning to introduce a universal licence where all the four operators can offer all telecoms services."
Egypt now has three mobile operators - Mobinil, Etisalat Misr and Vodafone Egypt - and one fixed-line operator - Telecom Egypt (TE) the state-owned operator that has a 45 per cent stake in Vodafone Egypt.
For years, TE has been keen to take out a larger chunk of the mobile sector, one of North Africa's largest.
It was widely believed that a fourth mobile licence would have been awarded to TE, but this licence reform would ease the state operator into the mobile domain with a majority of the market.
By contrast, Lebanon is seeking a way to reduce the state's hold on the telecoms sector. Lebanon's Telecoms Regulations Authority (TRA) and its communications ministry were working on a new public-private arrangement that was set to double the revenues of the telecoms sector by 2016.
Last year, the country's two state-owned mobile operators posted revenues of about US$1.8 billion (Dh6.61bn), of which $1.4bn went directly to government coffers. Earnings of Alfa Telecom and Touch, which are operated by Egypt's Orascom Telecom and Kuwait's Zain Group under management licences, contribute some 40 per cent to the national income. The lack of competition, however, has resulted in complaints about decrepit and unsatisfactory service.
Data published by speedtest.net last year revealed Lebanon to have the world's slowest internet connection, ranking behind Zambia and Afghanistan. This spurred the telecoms minister, Nicolas Sehnaoui, to publish a decree in September last year to increase internet speeds and lower costs to customers. The government, though, was unlikely to satisfy calls for privatisation of the mobile sector any time soon.
"The biggest barrier [to privatisation] is the loss of this income. The second barrier is political - deciding who gets what - and the third is national security," said Imad Hoballah, the acting chairman of the TRA.
"A new problem is who will build the infrastructure. There is a major fear that private companies will not put in the required investment."
The new plan between the TRA and communications ministry was intended as a temporary compromise to privatisation.
"[On] the bottom layer...the infrastructure will be owned by the government but will be operated by the private sector. The middle layer will consist of three to five operators that will provide services and capacity to the operators in the retail sector," said Mr Hoballah.
By dissecting the sector into these segments, the opportunities for new licences and more revenues increase.
"The size of the sector will double without reducing the government's income. The total revenue will grow to about $4bn, of which the government will get 40 to 45 per cent," said Mr Hoballah.
thamid@thenational.ae