"FIL MISH-MISH": PA ISSUES TENDER FOR MOBILE

UNCLAS JERUSALEM 001286

SIPDIS

SENSITIVE
SIPDIS

NEA FOR FRONT OFFICE; NEA/IPA FOR WILLIAMS/GREENE/WAECHTER;
EB/CIP FOR GROSS/BOEHME/GIBBS

E.O. 12958: N/A
TAGS: ECPS TINT TSPL PGOV KWBG
SUBJECT: "FIL MISH-MISH": PA ISSUES TENDER FOR MOBILE
OPERATOR IN PALESTINIAN TELECOM MARKET

REF: 2005 JERUSALEM 4508


1. (SBU) Palestinian Authority (PA) Telecom Ministry issued
a tender March 28 for eligible strategic partners to bid on a
30 percent share of a second mobile telecom operator in the
West Bank and Gaza. This operator would be granted a new
license to establish and operate a GSM telecom network and a
third generation (3G) network, as well as provide 3G services
and international services as of November 16, 2006.
Interested entities must purchase the request for application
(RFA) from the Telecom Ministry for JD 2,000 (USD 2,821) and
submit bids and accompanying documentation by June 26.
(Note: A copy of the RFA was emailed to NEA/IPA and EB/CIP.
End Note.) In addition, the interested parties are required
to pay an application fee of JD 20,000 (USD 28,210) for the
fees of the Advisory Firm tasked with processing and
selecting the winner of the bid to be announced July 6.


2. (SBU) According to the RFA, in order to be eligible to
submit an application, an applicant must:

-- have had substantial experience in the operation of a
mobile telecommunications network and in the provision of
mobile telecommunications services for at least three years,
having at least 300,000 subscribers as of December 31, 2005;

-- have developed such experience as a new entrant competing
with an incumbent mobile operator;

-- have had such experience by direct involvement either as
the operator itself or through a comprehensive management
contract giving the applicant substantially full control of
the operation of the network, provision of services and
overall running of the business;

-- neither be a significant shareholder in a mobile
telecommunications company in the West Bank/Gaza, directly or
indirectly, nor have a significant share of its owns share
capital be held, directly or indirectly, by a mobile
telecommunications company in the West Bank/Gaza or any of
its controlling shareholders (for the purpose of its RFA, a
significant share means 10 percent and controlling means
shareholding over 50 percent);

-- be organized under the laws of a country in which
Palestinian companies are permitted to apply for licenses to
operate telecommunications networks and provide
telecommunications services; and

-- have had annual gross revenues of at least JD 150 million
(USD 212 million) over each of its last three financial
years.


3. (SBU) PA Telecom Ministry Advisor Masshour Abudaka told
EconOff March 28 that the PA is looking for a strategic
partner with strong Israeli relationships in order to
persuade the GOI to grant additional mobile frequencies. He
said the new mobile operator would ideally be able to operate
in both Israel and the West Bank in order to compete with
other mobile operators in the region. He added that the
Palestine Investment Fund (PIF) would also own a 30 percent
stake in the pro forma ownership structure, while Palestinian
telecom partners would own 10 percent, and public
shareholders the remaining 30 percent.


4. (SBU) Comment: The outgoing PA Minister of Telecom Sabri
Saidam has been working on liberalizing the market for the
duration of his tenure in office and succeeded in issuing
this tender only two days before he left office. However, as
an Arabic saying aptly expresses, it will likely happen "fil
mish-mish" or in the time of apricots, meaning not at all.
The combination of the incoming Hamas government and the fact
that the GOI has yet to assign additional mobile frequencies
to the PA suggests that this initiative will fall by the
way-side. End Comment.
WALLES