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
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-- 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
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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

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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.

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