One of the last chances to buy a market leading mobile operator in the Arab world has the region's telecommunications giants licking their lips.
As a stable Lebanese government emerges from the chaos of recent years, the stalled privatisation of the country's two mobile operators has been given a new breath of life, with people familiar with the process expecting a sale to take place by early next year.
Lebanon's mobile network infrastructure is currently state-owned, with two operating companies - Alfa and MTC Touch - contracted until 2009 to manage the two networks, known as Mobile Interim Company (MIC) 1 and 2. Alfa is owned by Fal Dete, a joint venture between Saudi and German investors, and MTC Touch is a division of Zain, a regional operator based in Kuwait.
The sale of MIC 1 and MIC 2 to foreign investors could net the government more than US$7 billion (Dh25.7bn), according to some estimates. But it will come at a political and economic cost that will require tricky political manoeuvring to overcome.
The revenues earned by the operators are paid to the state, minus operational expenses and management fees. Payments from the mobile industry currently make up almost a third of the revenues received by the Lebanese government, making privatisation a politically sensitive topic.
But Lebanon's current political alignment means a sale of the two companies is now firmly on the table - although few political developments are considered certainties in a country whose politics is famously unpredictable.
The pro-privatisation Future Movement is the lead member of the ruling March 14 political alliance, which won a majority of seats in the country's 2005 parliamentary elections. The movement is firmly in favour of international investment, in no small part because regional trade built the empire that brought its leader and his family to power.
The party is led by Saad Hariri, whose father Rafik built a sprawling business conglomerate across the Middle East before leading Lebanon's political and economic rebirth after the conclusion of the civil war in 1990.
Rafik Hariri acted as both businessman and statesman, arranging for tens of billions of dollars of foreign reconstruction loans to stimulate the economy, while simultaneously holding a majority stake in Solidere, the company that spent much of this money on the rejuvenation of downtown Beirut.
After Rafik Hariri's assassination in early 2005, members of his family, including Saad, inherited a total of more than $16bn. For a time, his daughter Hind was the youngest billionaire on Forbes magazine's rich list.
One of Rafik's less-cherished legacies is the country's crippling external debt of almost $45bn, more than double its annual gross domestic product. Debt repayments account for more than 35 per cent of government spending, and by selling state assets such as telecommunications and energy companies, the government hopes to pay down the debt, reducing the amount of money needed to service it. Every major telecommunications company in the region has expressed interest in bidding in the auction. Qatar Telecom has said it would not baulk at a $3.5bn price tag for one of the networks, while Saudi Telecom has long made clear its ambition to acquire one of the networks - along with its $15bn acquisition war chest.
The Kuwaiti investment group Noor Financial, which has recently launched a telecommunications investment subsidiary, has also said it would take part in the auction, along with other licence sales in Qatar, Oman and Africa.
Interest in the two Lebanese operators reflects the increasing scarcity of attractive new opportunities for telecommunications operators in the Middle East. Every country in the region now has at least two mobile networks, with the most profitable customers already signed up.
New opportunities now come in the form of second fixed-line or third mobile licences in smaller markets like Qatar and Bahrain. Although breaking a fixed-line monopoly can be lucrative, it is most beneficial for an existing mobile operator, rather than an outside player new to the market. Egypt recently cancelled the sale of its second fixed-line licence, citing a poor international economic environment.
In such a climate, the opportunity to grab a business that has almost half a million relatively prosperous subscribers in a market with less than 40 per cent penetration is a seriously attractive one.
Due to tight government regulation and revenue maximising measures by the country's politicians, the Lebanese mobile market of one million subscribers is currently split almost exactly 50-50 between the two networks.
There is not heavy competition for new or switching customers, and calling fees are among the highest in the region. The government has been reluctant to make significant investments in infrastructure upgrades, meaning new high-speed data services such as mobile internet have yet to be fully exploited.
Such a market is ripe for international involvement, with Lebanon's relatively small geographical area and low mobile penetration meaning that rolling out a state-of-the-art national network and doubling customer numbers are both viable short-term possibilities for a new entrant.
In August, the telecommunications minister Jebran Bassil said mobile calling rates would be cut before any auction process began, and the government would try to invest in new infrastructure, both moves aimed at boosting customer numbers and, ultimately, the sale price for both networks.
"The Lebanese must understand that the rates or tariffs of mobile phones in Lebanon are partly commercial and partly taxes," he said, emphasising that his government did not believe it should be running a communications business as a revenue raising tool.
Hugely profitable state-owned operators such as Etisalat and Saudi Telecom probably do not share such sentiments, but it is likely to be one of the few areas of disagreement between the companies and Lebanon's new pro-business government.
tgara@thenational.ae
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SPECS
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UAE currency: the story behind the money in your pockets
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
How to apply for a drone permit
- Individuals must register on UAE Drone app or website using their UAE Pass
- Add all their personal details, including name, nationality, passport number, Emiratis ID, email and phone number
- Upload the training certificate from a centre accredited by the GCAA
- Submit their request
What are the regulations?
- Fly it within visual line of sight
- Never over populated areas
- Ensure maximum flying height of 400 feet (122 metres) above ground level is not crossed
- Users must avoid flying over restricted areas listed on the UAE Drone app
- Only fly the drone during the day, and never at night
- Should have a live feed of the drone flight
- Drones must weigh 5 kg or less
Nepotism is the name of the game
Salman Khan’s father, Salim Khan, is one of Bollywood’s most legendary screenwriters. Through his partnership with co-writer Javed Akhtar, Salim is credited with having paved the path for the Indian film industry’s blockbuster format in the 1970s. Something his son now rules the roost of. More importantly, the Salim-Javed duo also created the persona of the “angry young man” for Bollywood megastar Amitabh Bachchan in the 1970s, reflecting the angst of the average Indian. In choosing to be the ordinary man’s “hero” as opposed to a thespian in new Bollywood, Salman Khan remains tightly linked to his father’s oeuvre. Thanks dad.
Specs
Engine: Dual-motor all-wheel-drive electric
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Book%20Details
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2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, (Leon banned).
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
FIGHT CARD
From 5.30pm in the following order:
Featherweight
Marcelo Pontes (BRA) v Azouz Anwar (EGY)
Catchweight 90kg
Moustafa Rashid Nada (KSA) v Imad Al Howayeck (LEB)
Welterweight
Mohammed Al Khatib (JOR) v Gimbat Ismailov (RUS)
Flyweight (women)
Lucie Bertaud (FRA) v Kelig Pinson (BEL)
Lightweight
Alexandru Chitoran (BEL) v Regelo Enumerables Jr (PHI)
Catchweight 100kg
Mohamed Ali (EGY) v Marc Vleiger (NED)
Featherweight
James Bishop (AUS) v Mark Valerio (PHI)
Welterweight
Gerson Carvalho (BRA) v Abdelghani Saber (EGY)
Middleweight
Bakhtiyar Abbasov (AZE) v Igor Litoshik (BLR)
Bantamweight:
Fabio Mello (BRA) v Mark Alcoba (PHI)
Welterweight
Ahmed Labban (LEB) v Magomedsultan Magemedsultanov (RUS)
Bantamweight
Trent Girdham (AUS) v Jayson Margallo (PHI)
Lightweight
Usman Nurmagomedov (RUS) v Roman Golovinov (UKR)
Middleweight
Tarek Suleiman (SYR) v Steve Kennedy (AUS)
Lightweight
Dan Moret (USA) v Anton Kuivanen (FIN)
The%20specs
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Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
Result
Arsenal 4
Monreal (51'), Ramsey (82'), Lacazette 85', 89')
West Ham United 1
Arnautovic (64')
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
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Election pledges on migration
CDU: "Now is the time to control the German borders and enforce strict border rejections"
SPD: "Border closures and blanket rejections at internal borders contradict the spirit of a common area of freedom"
MATCH INFO
Uefa Champions League semi-final, first leg
Barcelona v Liverpool, Wednesday, 11pm (UAE).
Second leg
Liverpool v Barcelona, Tuesday, May 7, 11pm
Games on BeIN Sports
On racial profiling at airports
