GOL RENEWS MOBILE OPERATORS' MANAGEMENT CONTRACT (ECONOMIC

UNCLAS SECTION 01 OF 02 BEIRUT 000153 SIPDIS SENSITIVE E.O. 12958: N/A TAGS: ECON EFIN EINT PGOV LE SUBJECT: GOL RENEWS MOBILE OPERATORS' MANAGEMENT CONTRACT (ECONOMIC WEEK IN REVIEW, FEBRUARY 8 - 14, 2010) CONTENTS -------------- -- GOL RENEWS MOBILE OPERATORS' MANAGEMENT CONTRACT; PRIVATIZATION STILL IN THE WORKS -- WORLD BANK ESTIMATES 7% GDP GROWTH IN 2010 AND 2011 -- FRENCH INSEE ESTIMATES HIGHER 2009 REAL GDP GROWTH FOR LEBANON -- LOW QUALITY OF BROADBAND HURTING COMPETITIVENESS -- LEBANON IMPROVES SIGNIFICANTLY IN LOGISTICS PERFORMANCE INDEX GOL RENEWS MOBILE OPERATORS' MANAGEMENT CONTRACT -------------- ¶1. (SBU) Gilbert Najjar, the telecom ministry official responsible for the two GOL-owned mobile companies, said the cabinet extended the management contract for the two operators for six months starting February 1, 2010. According to Najjar, Telecom Minister Charbel Nahas will use this period to gather data on the mobile sector, outline the options for the privatization of the two mobile companies, and submit them to cabinet. Options include a public offering, strategic investors with management control, a combination thereof, or other possibilities, he said. Najjar insisted that "no one said we will delay privatization or that privatization will not take place." Nahas told us separately that he will have an idea of how the privatization will be structured before the end of May 2010. WORLD BANK ESTIMATES 7% GDP GROWTH IN 2010 AND 2011 -------------- ¶2. (U) Lebanon's GDP growth is estimated to reach 7% in 2010 and 2011, according to the World Bank's (WB) latest Global Economic Prospects report. This rate compares favorably with the rest of the MENA region, where GDP is projected to grow by 3.7% in 2010 and 4.4% in 2011. The report based its estimate on the assumption that if economic activity flourished in times of global economic crisis as it did in Lebanon in 2009, then economic indicators should continue along the same growth trend in 2010. The WB also estimated 7% growth for Lebanon in 2009, the second-highest growth rate in the MENA region. FRENCH INSEE ESTIMATES HIGHER 2009 REAL GDP GROWTH FOR LEBANON -------------- ¶3. (SBU) Lebanon recorded a real GDP growth rate of 8% in 2009, according to Alain Tranap, head of the international cooperation unit at the French National Institute for Statistics and Economic Studies (INSEE). Samir Nahas, head of the EU-funded program at the prime minister's office, told us Tranap visited Beirut in early January to review GDP calculations based on the national accounts series prepared by the PM's office and to prepare a preliminary estimate of real growth in 2009. A higher growth number would improve Lebanon's debt-to-GDP ratio, a trend the IMF is pushing the GOL to maintain. It is expected that once the GOL publicly endorses INSEE's 2009 real GDP growth figure, the World Bank and IMF will revise their estimates accordingly, as they did in 2008. LOW QUALITY OF BROADBAND HURTING COMPETITIVENESS -------------- ¶4. (U) Low broadband penetration, low bandwidth and high prices are negatively impacting Lebanon's private sector competitiveness regionally and internationally, according to the World Bank (WB). As a result, jobs are shifting to other locations in the region, potentially impacting the country's long-term economic development, it said. The WB attributed the lack of high quality broadband to a number of factors, including the delay in merging the operations of the telecom ministry and fixed-line public provider Ogero into a corporate entity, in addition to constraints placed on the ability of the Telecommunications Regulatory Authority (TRA) to regulate the sector. The Lebanese Broadband Stakeholders Group (LBSG),a coalition of professional associations, companies, and individuals, has been the most active group lobbying for broadband availability in Lebanon. LEBANON IMPROVES SIGNIFICANTLY IN LOGISTICS PERFORMANCE INDEX -------------- ¶5. (U) Lebanon ranked 33rd out of 155 countries worldwide and 3rd out of 17 MENA countries in the World Bank's (WB) 2010 Logistics Performance Index (LPI). The ranking constituted a significant improvement, as Lebanon had ranked 98th worldwide and 13th BEIRUT 00000153 002 OF 002 regionally in the previous survey conducted in 2007. The LPI measures countries' logistics environments based on six sub-indices, including supply chain performance, that cover customs procedures and efficiency, infrastructure quality, ease of arranging competitively priced shipments, competence and quality of logistics services, ability to track and trace consignments, and timeliness in reaching a destination. SISON