LEBANON: ECONOMY MINISTER NOW UPBEAT ON TELECOM

C O N F I D E N T I A L BEIRUT 001142

SIPDIS

SIPDIS

NSC FOR ABRAMS/SINGH/MARCHESE/HARDING, STATE FOR NEA/ELA,
NEA/FO FOR ATACHCO

E.O. 12958: DECL: 07/25/2017
TAGS: PGOV PREL PTER LE
SUBJECT: LEBANON: ECONOMY MINISTER NOW UPBEAT ON TELECOM
PRIVATIZATION


Classified By: Ambassador Jeffrey Feltman for reasons 1.4 (b) and (d)

SUMMARY
--------------


1. (C) Following a recent internal review of
telecommunications privatization, Economy Minister Haddad was
pleased with progress and hopeful that the sale of the two
mobile licenses could be concluded by year-end. To complete
the fixed-line sale, the GOL must sell 33 percent of the
shares publicly to Lebanese buyers. Hadad said Minister of
Telecommunications Marwan Hamadeh, seen as foot-dragging
before, appears to be "with the program,". End summary.


2. (C) A cheerful Minister of Economy and Trade Sami Haddad
reviewed recent progress in privatization of the mobile
telecommunications sector at a July 25 meeting with the
Ambassador and Econoff. Haddad, who said he was "very
pleased" about recent government decisions, thinks that the
GOL is meeting necessary milestones, and is on target for
sale of the mobile licenses by the end of the year. He
indicated that the actual sale will be a political decision,
which will depend on the outcome of the presidential
election, to be conducted Sept 25-Nov 24.


3. (C) According to Haddad, the GOL will sell 100 percent of
the shares in the new company to be formed by the sale of the
fixed-line business. (Note: The GOL will initially sell two
mobile licenses, with a possible third going to the new
owners of the fixed-line company.) Of that, 51 percent will
go to the "strategic buyer" who will run the company, and 49
percent will be sold on the open market. While the strategic
buyers may come from anywhere, at least 33 percent of the
company must be sold to public shareholders who are Lebanese.
The GOL will list the shares on the Beirut Stock Exchange
and another exchange in the Gulf region. These decisions
were based on recommendations by the GOL's consultants, JP
Morgan and Citibank last week.


4. (C) Haddad and the Ambassador concurred that Marwan
Hamadeh, the Telecoms minister, had been dragging his feet on
telecom reform, but now Haddad feels that Hamadeh is "with
the program." Hadad was meeting later that day with Hamedeh,
the Telecommunications Regulatory Authority (TRA),the Higher
Council for Privatization (HCP),and the consultants. He was
quite firm in asserting that the GOL does not need any
additional legislation in order to sell the licenses, a
crucial point because the Lebanese Parliament is not meeting
during the country's current political impasse.


5. (C) Comment: Haddad's comments confirm what we have
heard from observers outside of the GOL who also feel that
progress on Lebanese telecom reform is good, and
privatization is on target. It is encouraging that
internally the GOL seems to be unified in supporting the sale
of the mobile licenses, a critical milestone in the
government's reform program, and a critical piece of its
Paris III commitment. End comment.
FELTMAN