Lebanon will launch a tender to run its two state-owned mobile phone operators, currently managed by Kuwait's Zain and Egypt's OTMT , as part of a plan to revamp the telecoms sector, a senior government adviser said.
The telecoms ministry wants to award contracts for an extended 3-5 year period to manage the two state-run mobile phone operators, Touch and Alfa.
The government also plans to create a submarine cable link to Cyprus to increase bandwidth and spin off mobile telecom transmission towers into a separate state-owned business that could also be managed by a private company.
"We want to transform Lebanon into a digital hub," Karim Kobeissi, senior adviser to the Ministry of Telecommunications, told Reuters in an interview.
Unlike other countries in the region that have liberalized their telecom sectors, Lebanon has kept its infrastructure under state control. Its mobile phone penetration rate was 89 percent in 2012, lagging many other countries in the Middle East.
The existing contracts of Zain and OTMT to run Touch and Alfa ran their course at the end of January but have been extended to end-February to allow the cabinet to consider the revamp.
Kobeissi said new companies could win the tender, but there were no plans for a third mobile company to operate alongside Touch and Alfa.
"It will be open for qualified telecom operators," he said. "It's still early to see if other companies are interested."
The management contracts of Zain and OTMT have been renewed repeatedly, usually on an annual basis, since they took up the work in 2004 and 2009 respectively. Touch is the market leader, with a 53 percent share of Lebanon's mobile phone subscribers.
Touch and Alfa's combined revenue for 2011 was $1.6 billion, of which $1.4 billion went to the government, Business Monitor International estimates.
Both Zain and OTMT have told Reuters they were keen to continue operating in Lebanon. Losing the contract would be a bigger blow to OTMT, said Nadine Ghobrial, EFG Hermes telecoms analyst in Cairo.
"It has been trying to expand its mobile portfolio and it likes these sorts of management contracts," said Ghobrial. "It wants to secure more of them in other countries."
Kobeissi also said there would be no new attempts to sell stakes to private investors.
"There's no political consensus on privatization in Lebanon," he said.
But it may sell a separate management contract to run the transmitter tower company, Kobeissi added.