In its latest article, Lebanon’s Telecom Market Overview 2015, Business Monitor International (BMI) discussed the situational backdrop of the Lebanese telecom sector. The telecom industry is considered a monopoly, bearing in mind that there are only two government owned mobile operators in the country. Alfa Mobile, (Kuwait-based Zain operates the network on a management contract) having 47% market share and Touch, constituting 53% of the market (Egypt’s Global Telecom Holding are the contract managers) set high quotes for their services. However, according to the latest data, since 2008 Lebanon’s Average Revenue per User (ARPU) has gone down by more than 45% to $37 by September 2012, but still above the 30$ mark, which makes the ARPU one of the highest in the region. In turn, according to BMI, the industry must be privatized to lure competition, drive growth and lower prices but few tangible changes have been seen to the promotion of liberalization.
Contractual agreements between the government and the above mentioned companies have been renewed three times since September 2013; the latest being in October 2014. In the beginning of June 2014, the ministry imposed lower tariffs on calls (30% decline to $0.25/minute) and on internet so ARPU will be expected to fall. The Telecommunication Minister Boutros Harb, during the latest agreement, proposed to either renew current management contracts under new conditions, to tender the contracts to new companies, or turn the networks over to the ministry to run. The main adversity here is that new companies will still be under management contract and the companies will stay under the ownership of by the government. It will be hard for the Lebanese government to relinquish their hold on the industry, since it is the third largest source of income, earning approximately $1.5B for the government, after customs and VAT. It was reported, last month, that the minister is trying to speed up the establishment of a state owned operator called Liban Telecom, while privatizing the rest of the sector. BMI are apprehensive that this will actually happen since nothing noticeable has occurred yet.
According to BMI, since 2012, the market has changed little, retaining approximately 4 million subscribers, hence 4 million connections, illustrating the slow market growth. BMI believes that buyers at this point in time are seeing little change and that privatization will be beneficial for the industry and consumers alike as prices will fall and growth will spur on.
Mobile ARPU (USD)
Souce: BMI