Orascom Renews Lebanon Contract with Government

Orascom Telecom Holding (OTH) has extended its management agreement with the Lebanese government to mange one of the country's two state-owned mobile networks. The extension is for a period of 6 months ending on 31 July 2010.

Under this contract, OTH receives a monthly sum of US$2.5 million in addition to 8.5% of total revenues. Out of these amounts Orascom Telecom Holding is liable to cover all the operational expenses (OPEX) of the network and is entitled to keep the remainder as management fees. The Republic of Lebanon is fully responsible for the CAPEX during the contract period.

The mobile network assets of Alfa were transferred to the Republic of Lebanon with effect on August 31, 2002 following the termination of the build, operate and transfer contract under which Alfa was constructed.

"We're happy with the achievements made in the Lebanese mobile market through our management of Alfa during the past year, and are hoping to secure a presence for OTH within the long term plans of the Republic of Lebanon for its mobile communication market" said Khaled Bichara, Orascom Telecom's CEO.

Orascom, Zain Win Lebanon Bids

Orascom Telecom and Zain have won the contracts to operate Lebanon's two mobile networks. Contracts to operate the MTC Touch and Alfa mobile networks had expired last month. Orascom said the new contract will run for one year, with an option for another year. The company has agreed to increase Alfa's subscriber base from around 600,000 currently to 1 million by the end of 2009.

Zain also confirmed it will manage the MTC Touch network for another year, from 1 February, and target another 400,000 customers on top of the existing 800,000. The Lebanese government has agreed to finance the capital expenditure for expanding the networks and will pay the two operators management fees based on operating costs per subscriber.

Lebanon has some 1.1 million mobile phone users out of a population of 4 million. The new operators are expected to increase the network coverage and bring prices down. The new contracts are a stop-gap measure until long-delayed privatization of the mobile firms takes place. The privatisation has been put on hold because of global market conditions.