Monday, December 20, 2010

Third Mobile License: Syria Shortlists Five Companies but Disappointment Looms Out

December 20, 2010

Of the six firms that had submitted applications to compete for Syria’s third mobile license only five qualified for the second phase of the process. According to the list of the prequalified candidates, which was published on November 29, 2010 (the day when the pre-qualification phase was terminated) these companies are: Saudi Telecom Company, Etisalat (from the U.A.E.), Qtel (from Qatar), France Telecom and Turkcell. With the second phase, the offers proposed by the five mentioned companies will be evaluated and only the selected candidates will participate in the third phase, which is the real auction. According to the terms of the tender, the auction for the license will be held on April 12, 2011.  

The Syrian Ministry of Communications and Technology (MOCT) explained that only Iran’s Tamco was not admitted to the second phase. The evaluation committee (formed jointly by the MOCT and Germany’s advisory consultancy Detecon) did not accept Tamco’s proposal because of the company's inadequacy in meeting the tendering standards. Also before this pronunciation it was quite evident that Tamco was not capable of reaching the two main pre-qualification criteria (having operated a network with at least 1.5 million subscribers in at least two countries for a minimum of three years by the end of August 2010 and having started at least one network and operating it for 12 months by the end of August 2010). Etisalat and Turkcell have now the best chances of gaining the contest according to David Leach, a global telecoms analyst with TeleGeography, a research company. 

One week after the end of the pre-qualification phase, on December 8 2010, the MOCT organized a Pre-Application Conference at the Four Seasons Hotel in Damascus with all the involved parties: the five prequalified candidates, members of the MOCT among them Minister of Communications and Technology Imad Sabouni) and members of Detecon (this is the German consultancy advising the MOCT on how to award the license). The basic idea behind the decision to call up this conference was to implement an efficient coordination between the MOCT and the five candidate companies in order to have a high level of transparency in the process. Moreover, the MOCT wanted to have an information exchange with the five companies about the tendering process, the Syrian telecoms market and the opportunities for the third license operator. The second phase (Qualification Phase) started immediately after the end of the conference with the launch of the Request for Proposals (R.F.P.s).

The intentions for convening the conference were undoubtedly positive, but then the results were partly messed up. In fact, the executives of the five telecoms operators strongly contested the necessity of providing to the Syrian government revenue projections for their prospective businesses.  The third license will be auctioned so this request seemed very invasive as for the companies’ business strategy. Another pressing point for the contenders was the inevitability of regulating roaming agreements with Syriatel and M.T.N. Syria, the current two mobile operators already working in the country. It’s important that the new entrant does not face any disadvantages against both Syriatel and M.T.N. With reference to this last point, Mr. Sabouni expressed MOCT's intention of absolutely avoiding advantages and disadvantages, but rather of having a level playing field. Still during the conference, Mr. Sabouni was remembered about the need to comply with the Arab League boycott rules against Israel. With no doubt the vagueness and unclear applicability of the boycott rules play against a transparent and clear utilization of the third mobile license.

Vagueness about certain crucial clauses is inacceptable by modern business-oriented telecoms operators. Especially this time, with five foreign competing companies (none of the competing companies is Syrian), business pros and cons should be easily calculated. It’s still a very clear memory that nine years ago when the first two licenses (in reality BOT agreements) were awarded, later many irregularity surfaced (Egypt’s Orascom retired the investment in Syriatel just after two years in 2003). When two independent public figures criticized those irregularities, they were sent to prison for a total of twelve years. This time clarity is a must. Apart from this, good news for the telecoms sector is that, according to  the daily al-Watan, Mr. Sabouni announced that, by the end of December 2010 or at the latest at the beginning of 2011, the Syrian telecommunications authority would  be established.

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